January 2017 COLA SetSeptember 08, 2016
At their June 14, 2016 meeting, the Board of Trustees of the Public School and Education Employee Retirement Systems of Missouri (PSRS/PEERS) made several revisions to the Systems' Funding Policies. These revisions were based on recent adjustments to the Systems' actuarial assumptions, and were made necessary by improved mortality rates and an expected continuation of the current low-return investment environment1. The goal is to help keep contribution rates steady while continuing to provide financial protection for retirees during periods of high inflation.
The amended Funding Policies state that in years when the Consumer Price Index for Urban Consumers (CPI-U) for the previous fiscal year is between 0% and 2%, no COLA will be given. A COLA will be provided in years when the CPI-U is 2% or more:
|Change in CPI-U||COLA|
|0% or less||0%|
|Between 0% and 2%||0%|
|Between 2% and 5%||2%|
|5% or more||5%|
The Board voted to set the COLA at 0% during their September 7, 2016 meeting. This decision was based on the changes in the cost of living reflected by the CPI-U and the recommendation of the PSRS/PEERS actuary based on the CPI-U and the PSRS/PEERS Funding Policies. According to the U.S. Bureau of Labor Statistics, the increase in the CPI-U from July 1, 2015 to June 30, 2016 was 1.0%.
"The overall financial health and solvency of the plans for both current and future generations of Missouri public school educators and education employees is our primary goal," said Board Chairman Aaron Zalis. "While the Board understands and sympathizes with the current financial condition of many of our retirees and the impact the COLA decision has on each one personally, we feel the changes made to the funding policy were necessary to maintain the financial stability of the Systems."
PSRS service and disability retirees are eligible for COLAs on monthly benefits beginning the second January following their retirement date. For example, a PSRS member who retired July 1, 2016 is eligible for COLAs in January 2018. PEERS service and disability retirees are eligible for COLAs on monthly benefits beginning the fourth January following their retirement date.
1 For more information on recent changes to the Funding Policies, visit the PSRS/PEERS News Archive.