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Cost-of-Living Adjustment (COLA)

Current COLA (Plan 1): 1.46%

Current COLA (Plan 2): 1.46%

Cost-of-living adjustments (COLAs) allow your retirement benefit to keep pace with inflation. The COLA is based on the Consumer Price Index for all Urban Consumers (CPI-U), published by the U.S. Bureau of Labor Statistics and updated each July 1. During years of no inflation or deflation, the COLA is 0 percent.

If you retired under the Basic Benefit or Advance Pension Option, the COLA calculation is based on your Basic Benefit amount. If you retired under the Basic Benefit with the Partial Lump-Sum Option Payment (PLOP), Survivor Option or Survivor Option with the PLOP, the COLA calculation is based on your reduced benefit amount. Read more about benefit payout options.

Select from the following links for more information:

If You Retired Before February 1, 2013

Your first COLA goes into effect on July 1 after one full calendar year (January 1 to December 31) from your retirement date. Example: If you retired on September 1, 2012, you will become eligible for your first COLA on July 1, 2014. It will appear in your August 1, 2014 benefit payment.

Retired under Plan 1 before February 1, 2013? The amount matches the first 3 percent increase in the CPI-Urban and half of any remaining additional increase (up to 4 percent), for a maximum COLA of 5 percent. Example: If the CPI-U is 3.58 percent, the COLA will be 3.29 percent: 3 percent + (1/2 × .58) = 3.29 percent.

Retired under Plan 2 before February 1, 2013? The amount matches the first 2 percent increase in the CPI-Urban and half of any remaining additional increase (up to 8 percent), for a maximum COLA of 6 percent. Example: If the CPI-U is 3.58 percent, the COLA will be 2.79 percent: 2 percent + (1/2 × 1.58) = 2.79 percent.

If You Retired On or After February 1, 2013

Retired under Plan 1 on or after February 1, 2013? The COLA is calculated using the first 3 percent increase in the CPI-U and half of any additional increase (up to 4 percent), for a maximum COLA of 5 percent. Example: If the CPI-U is 3.58 percent, the COLA will be 3.29 percent: 3 percent + (1/2 × .58) = 3.29 percent.

Retired under Plan 2 on or after February 1, 2013? The COLA is calculated using the first 2 percent increase in the CPI-U and half of any additional increase (up to 2 percent), for a maximum COLA of 3 percent. Example: If the CPI-U is 3.58 percent, the COLA will be 2.79 percent: 2 percent + (1/2 × 1.58 percent) = 2.79 percent.

If you retired with an unreduced benefit or with a reduced benefit with at least 20 years of service credit, the COLA will go into effect on July 1 after one full calendar year (January 1 to December 31) from your retirement date. Example: If you retire on November 1, 2014, your first COLA will be effective July 1, 2016 and will appear in your August 1, 2016 benefit payment.

If you retired with a reduced benefit with less than 20 years of service credit, the COLA will go into effect on July 1 after one full calendar year (January 1 to December 31) from the date you would have become eligible for an unreduced benefit. Example: If your unreduced retirement eligibility date is October 1, 2020 but you retire on November 1, 2014 and have less than 20 years of service credit when you retire, your first COLA will be effective July 1, 2022 and will appear in your August 1, 2022 benefit payment.

COLA Exceptions

If you are eligible for a COLA under any of the following circumstances, your COLA will go into effect on July 1 following one full calendar year (January 1 to December 31) from your retirement:

  • You were within five years of qualifying for an unreduced retirement benefit as of January 1, 2013.
  • You retire on disability.
  • You retire directly from short-term or long-term disability under the Virginia Sickness and Disability Program (VSDP).
  • You are involuntarily separated from employment for causes other than job performance or misconduct and are eligible to retire under the Workforce Transition Act or the Transitional Benefits Program.
  • You die in service and your survivor or beneficiary is eligible for a monthly death-in-service benefit. The COLA will go into effect on July 1 following one full calendar year (January 1 to December 31) from the date the monthly benefit begins.

How the COLA is Calculated

  1. The average of the monthly Consumer Price Index for all Urban Consumers (CPI-U) for the most recent calendar year used to determine the VRS COLA is the difference between (i) the average for the calendar year just ended and (ii) the average for the most recent calendar year in which a COLA was paid.
  2. This difference is then divided by the CPI-U for the most recent COLA being paid.
  3. The result is multiplied by 100 to convert it to a percentage.

During periods of no inflation or deflation, the COLA will be 0 percent.

COLA Calculation Under Plan 1

The COLA is calculated using the first 3 percent increase in the CPI-U and half of any additional increase (up to 4 percent), for a maximum COLA of 5 percent. Example: If the CPI-U is 3.58 percent, the COLA will be 3.29 percent: 3 percent + (1/2 x .58) = 3.29 percent.

COLA Calculation Under Plan 2

The COLA is calculated using the first 2 percent increase in the CPI-U and half of any additional increase (up to 2 percent), for a maximum COLA of 3 percent. Example: If the CPI-U is 3.58 percent, the COLA will be 2.79 percent: 2 percent + (1/2 x 1.58 percent) = 2.79 percent.

If You Are on Disability Under the Virginia Sickness and Disability Program (VSDP)

If you are on long-term disability under VSDP over a full calendar year (January 1 to December 31), you will become eligible for a COLA on the following July 1, if you are still on long-term disability at that time.

If you retire from being on short-term or long-term disability under VSDP, you will become eligible for a COLA on July 1 following one full calendar year (January 1 to December 31) from the effective date of your retirement. If you return to covered employment instead of retiring and work for at least one full calendar month from the effective date of reemployment, the effective date of your COLA will be the same as for service retirement.

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