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STAR
COLA APPROVED FOR 2009
On October 9, 2008, the Board of Retirement voted unanimously
to approve funding for 2009 STAR COLA benefits for eligible retirees. The
Supplemental Targeted Adjustment for Retirees (STAR) cost-of-living
adjustment program is designed to ease the effects of inflation for
a retiree whose retirement allowance has lost more than 20 percent
of its purchasing power since retirement. Therefore, only a small
number of retirees are eligible to receive the 2009 STAR COLA. The
chart below shows eligible retirees based on plan and retirement
date.
Plan |
Retirement Date |
Percentage Increase |
A |
On or before 3/31/1981 |
1.2% |
B, C, D |
4/1/1977
through 3/31/1989 |
2.2% |
B, C, D |
4/1/1989
through 3/31/1990 |
0.6% |
NOTE: Plan E members are not eligible for STAR COLA benefits.
Eligible retirees
will see the increase reflected on their January 31, 2009 checks.
The 2009 STAR COLA is a permanent increase, which means that
this increase will become part of the retiree’s allowance for life. As such, this increase is included in the base allowance used to calculate future April 1st cost-of-living adjustments (COLA).
Each year, the Board of Retirement determines whether a STAR benefit is due to any LACERA retirees based on inflation experienced over their retirement years. Inflation is measured by increases in the Los Angeles-Riverside-Orange County, California Consumer Price Index (CPI).
The CPI change from the prior year is compared to the maximum allowable cost-of-living percentage increase payable by LACERA on April 1 (3% for Plan A and 2% for Plans B, C, D and E). In years where the change in CPI is greater than the maximum cost-of-living increase, the difference between these two percentages is accumulated annually and is called the COLA Accumulation.
The accumulation
of differences each year reflects how much purchasing power has
been lost from a retiree's original retirement benefits. By law,
the Board of Retirement may provide STAR increases after the accumulation
exceeds 20%. The Board also determines whether the benefit should
be an ad-hoc benefit (paid for one year only) or a permanent benefit
(added to the base retirement allowance for the member’s
life). The total projected cost of the permanent 2009 STAR Program
is approximately $15.1 million.
10/20/08
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