October 14, 2022: Thursday morning’s announcement by the Social Security Administration of an 8.7% COLA increase for 2023, while not unexpected, confirms what we already knew – inflation has placed substantial financial pressure on retirees. In fact, an 8.7% Consumer Price Index (CPI) is the largest increase since 1981, when inflation hit 11.2%!
Taken together with the 5.9% COLA, the past two years have seen a 14.6% increase in consumer costs. As the federal government’s report points out, a large driver of inflation continues to be the price of food – a cost that unavoidably impacts retirees living on fixed incomes.
This news brings renewed importance to the ongoing work to increase the COLA base for State and Teacher retirees, as well as local retirees. As you will soon read in our November newsletter, 33 local retirement systems (and their local legislative bodies) have fully approved a higher COLA base in 2022. Several other retirement boards have approved a higher base and are now awaiting approval of their respective legislative bodies.
At the state level, Mass Retirees is urging the legislature to raise the State and Teacher COLA base within the Commonwealth’s Pension Funding Schedule. The revaluation of the schedule, which funds both the State and Teachers retirement systems, is now underway. Included within the new schedule will be pension fund investment returns from 2019-2021.
I should point out that any increase in the COLA base approved after July 1, 2022 will be applied to COLA’s granted from July 1, 2023 and beyond.
However, we continue to advocate for the passage of H.5124 – legislation that will allow local retirement systems to increase the 3% FY23 COLA up to an additional 2%. Originally included as an outside section within the FY23 State Budget, the proposal would grant authority to local retirement systems to approve the same 5% COLA granted to State and Teacher retirees.
Acting at the behest of the Mass Municipal Association, Governor Baker returned the section to the legislature with an amendment requiring approval both the local retirement board AND the municipal government. As we have explained, given the fact that the formal legislative session ended on July 31st, we had no choice but to accept the governor’s amendment now known as H.5124.
The House approved H.5124 on July 30th. The measure is now awaiting action before the State Senate. Following the announcement of the 8.7% CPI, Frank Valeri and I once again called upon the Senate to pass H.5124 as soon as possible.
Once passed into law, local retirement boards will have the ability (with local government approval) to increase the local COLA from 3% up to 5%, retroactive to July 1, 2022. Mass Retirees encourages local retirement board officials and retirees to contact your local State Senator in support of H.5124.
I would also like to remind you of two important upcoming events. Next Thursday (10/20), the state’s GIC will meet in open session. It is anticipated that a vote will be taken to select health insurance plans for the coming fiscal year. Plan design decisions may also begin to be known at that time.
On Friday (10/21), Mass Retirees will hold a virtual Tele-Town Hall meeting starting at 1PM EST. In addition to providing a full update on the COLA, news from the GIC’s meeting, and the latest on the Social Security WEP & GPO we will also be joined by Salem Mayor and our endorsed candidate for Lt. Governor Kim Driscoll.
There are two ways in which members can participate in our Tele-Town Hall meetings. First, simply accept the auto-connect call from our Association at the time of the meeting on Friday, October 21st. Members can also call toll-free 833-491-0336 at the time of the meeting.
Please look to page 3 of the November Voice for a full list of upcoming meetings. The newsletter will begin to appear in member’s mailboxes this coming week.
With great appreciation,
Chief Executive Officer
Mass Retirees Association