BOR APPROVES 2014 RETIREE COST-OF-LIVING ADJUSTMENT
At its February 13th meeting, the Board of Retirement (BOR) approved a +1.0 percent 2014 cost-of-living-adjustment (COLA) for retirees, eligible survivors or beneficiary(ies), and/or alternate payees. The increase, which is effective April 1, will be reflected in your April 30th check.
The adjustment is based on the change in the cost of living from December 2012 to December 2013, as released by the Bureau of Labor Statistics Consumer Price Index (CPI) for all Urban Consumers in the Los Angeles-Riverside-Orange County area. For 2014, the year-to-date change is 1.1 percent. Rounded to the nearest one-half of one percent, as prescribed by law, the result is 1.0 percent.
One percent is less than the maximum increase (3.0 percent ) allowed in LACERA Plan A. In Plans B, C, D, and E the maximum allowable increase is 2.0 percent.*
According to the provisions of LACERA retirement plans, if the COLA percentage exceeds the maximum allowable (as it often did in past years), the excess percentage is accumulated to supplement future COLA benefits. The accumulated percentage carryover is known as the COLA Accumulation. The longer you have been retired (or receiving a survivor’s allowance), the more COLA carryover you have accumulated.
LACERA uses the COLA Accumulation to fund the maximum increase allowable under each Plan.
2014 COLA ADJUSTMENT: EFFECT ON all plans
Since this year’s 1.0 percent COLA increase is less than the maximum allowable, qualified retirees and eligible survivors in all LACERA plans with sufficient COLA Accumulations will draw from them to supplement this year's COLA. The amount available to fund the supplement is limited to the accrued balance of each member’s respective COLA Accumulation. In cases where a COLA Accumulation balance is not sufficient to fund the difference between the 1.0 percent COLA and the maximum allowed under the Plan, LACERA will apply an increase equal to the amount of the COLA Accumulation.
|Retirement Plan||Retirement Date*||2014 COLA||+||Withdrawal
from COLA Accumulation
|N/A = zero COLA Accumulation|
|Plan A||Prior to 4/1/84||1.0||+||(-2.0%)||=||3.0%|
|Plan A||4/1/84 – 3/31/85||1.0||+||(-0.7%)||=||1.7%|
|Plan A||4/1/85 – 3/31/14||1.0||+||N/A||=||1.0%|
|Plans B, C, D||Prior to 4/1/07||1.0||+||(-1.0%)||=||2.0%|
|Plans B, C, D||4/1/07 – 3/31/14||1.0||+||N/A||=||1.0%|
|Plan E**||6/4/02 – 3/31/07||1.0||+||(-1.0%)||=||2.0%|
|Plan E**||4/1/07 – 3/31/14||1.0||+||N/A||=||1.0%|
*Date also applies to retiree’s survivor or beneficiary(ies) and/or alternate payee.
**Plan E COLA increases apply only to service credit earned after June 4, 2002 and any purchased Plan E Elective COLA. Plan E members who retired after June 4, 2002 will receive up to a 2 percent COLA increase. The portion of the 2 percent COLA is based upon a ratio of the months of service earned after June 4, 2002, plus any purchased Plan E Elective COLA, divided by the total months of service.
2014 COLA adjustments take effect with the April 2014 allowances.
View the COLA Accumulation chart.