Eldridge Bay Retirement System

Cost-of-Living Adjustments (COLA)

Each year, Massachusetts retirement boards may grant a cost-of-living adjustment to retirees and survivors — an increase in the monthly allowance to help offset inflation. The framework is in MGL Chapter 32 § 103.

How a COLA works

A Massachusetts COLA is not an automatic across-the-board percentage increase on the full benefit. Instead:

  • The board votes each year on whether to pay the percentage PERAC reports for that year, and the base is the dollar amount of the annual benefit to which the percentage applies. A board may choose to pay more than PERAC's recommended percentage, up to a statutory maximum of 3% (§ 103(i)); PERAC does not set that maximum. The base starts at $12,000 in the statute (§ 103(a)); a board can raise it, and a base increase needs local acceptance, not PERAC (see below). Contact the retirement office for our current base.
  • The percentage applies only to the portion of the annual allowance at or below the COLA base. Benefits above the base are not adjusted by the COLA.
  • Each year's increase is added to your allowance and becomes part of it for future years (§ 103(c)), but the percentage is always calculated only on the base.

A worked example

Suppose a retiree's annual allowance is $30,000 and the board votes a 3% COLA on a $12,000 base for the year ($12,000 is the starting base in the statute, § 103(a); a board may have raised its own, so contact the retirement office for the base that applies):

  • Base portion of annual benefit: $12,000
  • COLA on the base: 3% × $12,000 = $360 / year
  • Monthly increase: $360 ÷ 12 = $30 / month

The same retiree's allowance above $12,000 ($18,000 in this example) does not receive an adjustment — it stays the same.

The annual process

  1. PERAC report. Each April 1, PERAC sends the board its recommended percentage for the year. The board reviews it.
  2. Vote. The board votes whether to pay it. A board may pay more than the recommended percentage, but not more than 3% (§ 103(i)).
  3. Notice to PERAC. The board files notice of its decision with PERAC within 30 days (§ 103(c)).
  4. Effective date. The COLA typically takes effect July 1 (the start of the state fiscal year). The first adjusted check is the July payment.
  5. Notice. Retirees receive a written notice of the COLA. The board posts the COLA notice in Documents under "COLA Notices" and announces it in News.

Eligibility and timing

You are eligible for a COLA if you were receiving a retirement allowance on June 30 of the prior fiscal year. This applies to retirees and to spouses and other beneficiaries who were receiving an allowance on that date (§ 103(c)). The increase applies only up to the COLA base. Contact the retirement office for specifics.

Survivors and disability retirees are generally COLA-eligible on the same schedule as superannuation retirees.

COLA history

The board's year-by-year COLA actions are recorded on the COLA History page. The full record is also filed under Documents → COLA Notices, organized by fiscal year, with the notice filed with PERAC for each.

What a COLA is not

  • Not a guarantee. The board may vote a smaller percentage or no COLA at all in a given year if circumstances warrant. A no-COLA year is unusual but not impossible.
  • Not a full inflation match. The statutory 3% maximum and the base cap mean the COLA usually offsets only a portion of inflation, particularly in high-inflation years.
  • Not a federal Social Security COLA. Federal Social Security has its own annual COLA, set by federal statute and applied to the full benefit. Massachusetts public-pension COLAs are independent.

Common questions

Why isn't the COLA applied to my whole benefit? The base limitation is built into MGL Chapter 32 § 103. It dates from a 1997 reform that traded a higher base for limits on the percentage applied to it.

Can the board raise the base? Yes. A board can raise its base in multiples of $1,000. A base increase is set locally: the board votes it and the local legislative body accepts it (§ 103(j)). The board then notifies PERAC. Some boards have raised it; the COLA History page records the Eldridge Bay Retirement System's actions.

Where do I get the actual percentage in dollars? After each year's COLA notice, the board's office or the Member Portal can give you the exact dollar increase on your specific benefit.