The annual cost of living adjustment (COLA) that Tier 1 members may receive is effective April each year and is first payable in April’s month-end check. This annual increase is based on changes in the Consumer Price Index (CPI) of the San Francisco-Oakland-San Jose area. In 2018 it is formulated by analyzing changes in the index from December 2016 to December 2017. The proposed increases are then provided by Retirement Board’s actuary. The actuary recommended a 3.0% increase for 2018.
The Board of Retirement voted at the February 8, 2018 meeting to adopt a 3.0% increase. Although some retirees (those retiring before April 1, 1985) may have an accumulated COLA balance (banked COLA), a maximum of 3.0% will be received for all Tier 1 retirees since that is the maximum possible.
Banked COLA Defined: In years where the CPI increase is greater than the maximum allowed COLA increase, the difference is “banked" for future years. The banked percentage may be drawn upon in later years when the COLA (before the bank) is less than the maximum allowed increase of 3%.