Ask Benny
Ask Benny
Introducing Ben E. Fits, aka Benny, our latest advice column dedicated to retirement benefits!
This feature is designed to be an invaluable resource for our members, offering guidance on pension-related queries, retirement benefits, beneficiaries, and retirement planning.
If you have any questions, feel free to email us!
Dear Benny
I’m a new County of Orange government employee, and heard about the pension plan offered here. Could you explain what a pension plan is and how it differs from a 401 (k)?
Let’s demystify the jargon and break down the difference between a Defined Benefit Plan (DB or pension) and a Defined Contribution Plan (DC) in the simplest way.
Dear Benny
I read that the COLA is based on the CPI from the prior year, and the COLA is set for 3.5%. However, it said that the COLA will actually only be 3% with the remaining 0.5% going into the retiree's COLA bank. Why isn't the full 3.5% given to recipients?
The 3% limit is outlined in Government Code section 31870.1
In short, a COLA Bank is a reserve where any amount exceeding the 3 percent limit in COLA adjustments is saved for later use.