Retired members of PSRS/PEERS will be getting a cost of living increase for 2018. After more than two months of research, and input from the most recent actuarial analysis of both PSRS and PEERS, the Board of Trustees approved a 1.63 percent cost of living adjustment, modified the COLA policy and changed the assumed rate of return on investments held by the system.
The trustees reviewed the actuarial analysis and adjusted the assumed investment rate of return. The trustees then revised the current cost of living adjustment policy allowing for an ad hoc 1.63 percent increase, effective Jan. 1, 2018. The trustees examined the feasibility of a new COLA policy and set four key goals, which also align with MSTA’s adopted resolutions.
- Provide for the security and financial stability of the plan.
- Maintain the contribution rate at or below current levels.
- Provide a consistent cost-of-living adjustment for retirees.
- Prove that any changes would not require legislative changes.
After a lengthy public work session with professional actuaries, the trustees decided at their November meeting to lower the assumed rate of return to 7.6 percent creating a more realistic projection of future investments. They modified the current COLA policy and approved the 1.63 percent ad hoc COLA for 2018.
New PSRS/PEERS COLA policy
- 0% COLA when CPI is negative or when CPI is between 0% – 2% and cumulatively below 2%
- 2% COLA when CPI is between 0% – 2% and cumulatively 2% or more
- 2% COLA when CPI is between 2% – 5%
- 5% COLA when CPI is above 5%
- Cumulative calculation resets after a 2% COLA is provided
While many retirement systems are limiting or restructuring benefits, PSRS/PEERS remains on a strong foundation that will maintain a robust retirement system for future, and current members while protecting the purchasing power of retirees.