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 annually on a percentage (typically up to a 3% maximum, set by PERAC) and a base (the dollar amount of the annual benefit to which the percentage applies).
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.
The COLA compounds over time — a retiree who receives a 3% COLA on a $14,000 base in two consecutive years gets two layered increases on that base.

A worked example

Suppose a retiree's annual allowance is $30,000 and the board votes a 3% COLA on a $14,000 base for the year:

Base portion of annual benefit: $14,000
COLA on the base: 3% × $14,000 = $420 / year
Monthly increase: $420 ÷ 12 = $35 / month

The same retiree's allowance above $14,000 ($16,000 in this example) does not receive an adjustment — it stays the same.

The annual process

Inflation review. The board's actuary reviews the consumer price index and the financial position of the system.
Vote. The board votes on the percentage and base. The percentage cannot exceed PERAC's annual maximum (typically 3%).
PERAC concurrence. The vote is forwarded to PERAC, which reviews and concurs (or rejects, in rare cases) under MGL Chapter 32 § 21(1)(d).
Effective date. The COLA typically takes effect July 1 (the start of the state fiscal year). The first adjusted check is the July payment.
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

Most retirees become COLA-eligible after at least 12 full months on retirement (in some boards' practice, the first July following the date of retirement). Newly retired members may not receive the first COLA after retirement, depending on timing — the COLA notice each year specifies the eligibility cutoff.

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 PERAC concurrence letter 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 PERAC-set maximum (typically 3%) 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. The board can vote — subject to PERAC concurrence — to increase the base above the legacy $12,000 or $14,000 figures. 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.