COLA and STAR COLA

COLA
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, COLA is an important benefit available to you as an SDCERA member, helping to offset the effects of inflation.

Tier A and Tier I members are eligible for up to a 3% increase each year. Tier B 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 wait until the following year to receive any applicable COLA.

COLA Bank
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%, members with a COLA bank of 1% or more would receive a 3% COLA that year (2% based on the CPI and 1% from their 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 at retirement (prior to any COLAs) is guaranteed for life and in no case will a COLA decrease it below that amount.

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 you 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.