Cost-of-Living Adjustments (COLA)


Cost-of-living adjustments are intended to help your retirement benefit payments keep pace with the rise in cost of goods and services over time.
FRS Pension Plan FRS Investment Plan
  • FRS Pension Plan members who retired prior to July 1, 2011 will receive a 3% COLA each July 1. For Pension Plan members retiring after July 1, 2011, the COLA is based on the following formula: Service earned prior to July 2011 divided by total years of service at the time of retirement or DROP multiplied by 3%.

  • You will receive a COLA on your July monthly benefit amount (if you earned service credit prior to July 1, 2011). The increase is not included in the Health Insurance Subsidy. If you have been retired for less than twelve months, your initial cost of living is prorated.
  • You may purchase one of several fixed annuities that offer annual cost-of-living increases at any time after retiring. You can use some or all of your account balance to buy these annuities, which are guaranteed by a highly rated private-sector insurance company (MetLife). These annuities can provide guaranteed payments for life, payments over certain periods or have joint and survivor benefits. You can choose monthly or other payment periods.

  • If you elect a lump-sum distribution or you choose not to purchase an annuity that offers a cost-of-living increase, you will not receive an automatic annual cost-of-living increase. Whether your benefits keep up with inflation will depend on the performance of your investment funds.