An Important Message About OCERS’ 2022 COLA Adjustment
February 22, 2022
As a result of a 3.83 % change (rounded to 4% as is required by statute) in the Consumer Price Index (CPI) – also known as the inflation number – the OCERS Board of Retirement approved a 3% Cost-Of-Living Adjustment (COLA) for all eligible payees at its regular meeting on Tuesday, February 22, 2022. OCERS payees will see the 3% COLA increase on their May payment (which will be deposited into eligible payees’ accounts on April 29), with the other 1% going into their “COLA Bank.”
The annual COLA that OCERS payees receive each April is determined based on the change in the annual average of the Consumer Price Index (CPI) for the Los Angeles/Long Beach/Anaheim region from one year to the next. This annual change is then rounded to the nearest 0.5% with the maximum adjustment being 3% with any excess being “banked” for future years.
Frequently Asked Questions
Recent news articles reference an inflation number of 6.6%. Why is OCERS different?
In setting the COLA for 2022, the Board’s practice is to review changes in the CPI by using the change in an annual average of prices from 2020 to 2021, as provided by the Bureau Labor Statistic. The 6.6% inflation number on the other hand is a snapshot of the change in prices from just one month to another, i.e. December 2020 compared to December 2021.
Why is the Social Security COLA so much higher than OCERS?
The Federal Government uses a different measurement period as well as using the entire nation as the region for determining CPI.
Other systems in California use a single month comparison. Why does OCERS use an annual comparison?
According to Segal, slightly over one-half of their clients are using the annual average comparison while the rest are using a single monthly comparison. It has been the OCERS Board’s practice to use an annual average comparison.
Why do other local systems have a different inflation number? San Bernardino County Employees Retirement Association (SBCERA) recently approved a 2% COLA based on an 8% inflation number. Additionally, LACERA approved a 2-3% COLA (depending on a member’s plan) based on a 6% inflation number.
SBCERA determines their COLA by comparing the CPI change for a specific month (November 2020 to November 2021) and they use a different region (Riverside/San Bernardino/Ontario) based on where their County seat is situated. We understand LACERA bases its COLA on the same region as OCERS however their practice is to use the change in CPI from December to December instead of an annual average.
OCERS’ website has additional information on the COLA and “COLA Bank”; you can also watch an informative animated video that is helpful in understanding how the COLA works to benefit OCERS payees. Learn more at: https://www.ocers.org/cola-and-star-cola