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Monday, June 15, 2015

Dangling Conversation

Many people were confused when PERS posted its explanation of how the lost COLA will be restored to retiree accounts.  It always seemed to me that something was missing, yet was obvious.  After many questions addressed to me and to others over on our PERS Discussion Group, I decided that I would go to the source - PERS - and ask for clarification, and, if necessary, an update to the web site.  I am happy to report that the confusion is gone now, and PERS has corrected their FAQ about the restoration in the way I assumed it would be done, but was uncertain because of the unclear language.
You can go to the PERS website (see link to the left of the posts), or you can read the relevant change here.  In particular, for those members who retired prior to May 1, 2013, the COLA restoration will take place in only two steps.  The first step will be a 2% COLA on the CURRENT (uncorrected) benefit effective July 1, 2015 and paid out on August 1.  The second (and only) step will take place in the period between now and the payment received on November 1, 2015.  At that point, the 119,000 retirees who retired before May 1, 2013 will have the accrued unpaid COLA restored and the benefit RESET to the correct level so that the November 1, 2015 payment will be corrected (and will be a one-off large check).  Your first normal payment with all benefits corrected will be the December 1 check.  The official wording from the PERS website is below.  Hope this clears up the confusion.
  1. Calculate the amount owed to those benefit recipients (~119,000) who retired on or before May 1, 2013, and are not affected by the legislation. Our goal is to pay that group by October 30, 2015. The method of payment would be consistent with that currently selected by each benefit recipient (automatic deposit or paper check). We will also be resetting each benefit recipient’s compounded COLA and current year COLA so the benefit payment received beginning November 1, 2015 will be correct.