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Monday, January 11, 2016

Changes

(RIP David Bowie).  A quick note to those still waiting for the COLA adjustments to be implemented.  I’ve just learned that the cohort scheduled for January restoration has been pushed back to February.  The major reason for this is that these calculations have proven to be a bit more complicated than first imagined, and PERS strives to make them accurate the first time.  With the added pressure of a quadrupling of December 1 retirements over 2014, something had to give.  As I understand the plan, the one-time catch up payment will drop sometime towards the middle of February, while the first regularly adjusted benefit check should be the payment on March 1, 2016.

On a related subject, the 2016 COLA will be known in early February.  Based on information from the US Bureau of Labor Statistics, the actual CPI change is likely to be very small, possibly 0.5% based on the first half of 2015.  If this happens, those who retired between August 1, 2015 and July 1, 2016 will only receive slightly more than 0.5%, while earlier retirees will have some COLA bank to draw from and will see COLA closer to the 2% range.  For those who retired prior to May 1, 2013 (unaffected by the Legislative changes to the COLA), the adjustment will be 2%, but this will draw down balances from the bank quite noticeably.  At this point, the actual CPI change is only a guess, but there isn’t much in the latter part of 2015 that inspires confidence that it changed very much from the first half.