Retired SDCERA members are eligible for an annual cost-of-living adjustment (COLA) based on the Consumer Price Index (CPI) for the San Diego area. Because
inflation can erode retirement benefits over the years, the COLA is an important benefit available to you as an SDCERA member, helping to offset the effects of
Tier A and Tier I members are eligible for up to a 3% increase each year. Tier B and Tier C members are eligible for up to a 2% increase. The
applicable COLA is then effective April 1 of each year, and
is paid beginning with the April retirement payment.
Members who have a retirement date on or before March 31 are eligible for that year’s COLA. Members who retire after March 31 will be eligible to receive a COLA in future years, if applicable.
Because the maximum allowable COLA is 2% or 3%, depending on your tier, any
increase in the CPI beyond that maximum is placed in a COLA bank. This amount can be applied in a future year, when the CPI change is less than the maximum. For example, if you are a General, Tier A member and the CPI increases 4%, SDCERA would increase your benefit by 3% and save 1% in your COLA bank. The following year, if the CPI increases only 2%, you would receive a 3% COLA that year (2% based on the CPI and 1% from your COLA bank).
Alternatively, CPI decreases are also banked. If a member's COLA bank is insufficient to offset a negative CPI, the amount of their monthly
benefit will be reduced. A member's benefit amount is set at retirement (prior to any COLA) and in no case will a COLA decrease
If a member's COLA bank is sufficient to absorb the negative CPI, the entire amount will be applied to the COLA bank. If an amount remains after the negative CPI is offset, the member will receive a COLA increase up to the remainder of the bank, but no greater than the maximum amount allowed.
Supplemental Targeted Adjustment for Retirees (STAR) COLA
The Supplemental Targeted Adjustment for Retirees (STAR COLA) adds a supplemental cost-of-living payment to the monthly retirement or survivor payments. To be eligible, you must be a retired member who had lost more than 20% of your purchasing power as of April 1, 2007.
If you are eligible for the STAR COLA, it is a permanent part of your monthly retirement benefit and will be eligible for the cost-of-living adjustment of up to 3% each year.