The COLA, payable on August 1, 2013, is capped at 1.5 percent for all benefit recipients based on the passage of Senate Bill 822 (2013 Legislative Session). This cap is lower than the previous 2 percent maximum cap for COLAs.
The cap on COLA payable August 1, 2014, and beyond will vary based on the amount of the annual benefit. Benefit recipients will receive a 2 percent increase on their first $20,000 of a benefit, so anyone with an annual benefit that is $20,000 or less will receive a 2 percent COLA.
The COLA gradually decreases on the amount of an annual benefit above $20,000 beginning with the August 1, 2014 benefit payment:
1.5 percent on a benefit that is between $20,001 and $40,000,
1 percent on a benefit that is from $40,001 to $60,000, and
0.25 percent on all benefits above $60,000.
Benefit recipients whose annual benefit is between $20,000 and $40,000 will receive a COLA of $400 on the first $20,000 plus a 1.5 percent COLA on the portion of their benefit that is above $20,000.
Benefit recipients whose annual benefit is between $40,000 and $60,000 will receive a COLA of $700 on the first $40,000 plus a 1 percent COLA on the portion of their benefit above $40,000.
Benefit recipients whose annual benefit is more than $60,000 will receive a COLA of $900 on the first $60,000 plus a 0.25 percent COLA on the portion of their benefit above $60,000.
If a benefit recipient has been receiving a benefit for less than 12 months on July 1 of any year, the COLA is not pro-rated based on the number of months of retirement but is calculated as if the recipient had been retired for a full year.