The official Bureau of Labor Statistics inflation rate for 2011 was published yesterday. For the Portland-Salem area, the figures PERS uses for its COLA calculations, the 2011 rate of inflation was 2.86% This means that for everyone retired by July 1, 2012, the August 1st PERS payment will go up by the statutory maximum of 2%, with 0.86% added to each individual's "COLA Bank".
For those members still on the hook for repaying the "overpaid" benefits during the 2000 - 2004 retirement period, the COLA will probably be used to disguise the fact that repayments will begin at the same time the COLA is paid. Those opting for the "actuarial reduction" method of repayment will get little to no benefit from this COLA as it will probably be given with one hand and taken away with the other. This truly meets the description of "money for nothing".
3 comments:
What's a Cola Bank?
Rich
PERS COLAs (Cost Of Living Adjustments) are capped or limited to no more than 2% each year. Actual living costs as measured by the CPI index are not. So Oregon law provides that in years where the CPI is more than 2% PERS retirees can "bank" any amount over 2%. Then in years when the CPI is less than 2%, if a retiree has a balance in their COLA Bank, that credit will be used to bring the COLA for that year up to 2% or at least as much as they have 'credit' in their COLA Bank. So COLA Bank is the phrase used to name this accounting maneuver. I hope this helps.
peg
Thanks for the clarification. I'm a newby retiree and didn't know of that provision.
Rich
Post a Comment