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COLA Adjustment for July 1, 2010
In 2010, the CPI for the Los Angeles area is negative 0.8%. This is the first time in LACERS' history of COLA processing that a decrease in the CPI has occurred.
The Board of Administration adopted the following cost-of-living adjustments for eligible retired Members and beneficiaries, effective July 1, 2010, at their April 27, 2010 meeting. This COLA will be effective July 1, 2010:
In spite of the negative change in CPI, none of LACERS Members and beneficiaries will experience a reduction of their retirement allowances. In fact, the large majority of LACERS retired Members and beneficiaries will still receive a COLA up to 3% by drawing down their COLA "banks." These banks represent past CPI changes in excess of 3% accumulated for applying in the future when CPI changes are less than 3%. Although some COLA banks will be reduced to zero, none will be reduced to a negative balance.
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You will receive an annual Cost-of-Living Adjustment, or "COLA," if you are a retired LACERS Member or an eligible surviving spouse/domestic partner who receives a continuance benefit.
By May of each year, the LACERS Board is required to determine the Consumer Price Index (CPI) for the Los Angeles area in order to provide an annual COLA. Because the COLA cannot exceed 3.0% (Administrative Code Section 4.1040), when the CPI is greater than 3.0%, the difference between the maximum 3.0% and the actual CPI will be set aside in a "COLA bank."
Just how much of a COLA you will receive each year depends on your effective retirement date and how much you have "banked." If you have been retired less than one year, you receive 1/12th of the increase for each whole month you have been retired prior to July 1st.
For example, when the CPI is less than 3.0%, the COLA bank will be utilized to increase your COLA up to the maximum 3.0%, for the year if you have a "bank balance" available from previous years. If you have a zero "bank balance," your COLA will be the same as the actual CPI (up to the 3.0% maximum).
Here is a link for the COLA Table that illustrates LACERS' Cost-of-Living Adjustments.
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