While local retirement systems continue to focus on incrementally increasing their respective COLA base, the work of the state’s Special COLA Commission continues.
As we reported in the July edition of The Voice, the 9-member Commission is heavily focused on the creation of a new enhanced or “senior” COLA benefit that would be paid to long-term retirees in addition to the traditional COLA. In addition, the Commission is mandated to explore the means of increasing the COLA base for members of State and Teachers’ Retirement Systems.
In the July Voice, we spelled out our Association’s vision for the new enhanced COLA benefit. While the details of what the Commission may recommend remain a work in progress, the general premise is the creation of an additional COLA benefit that would be applied to career public employees who have been retired for 10 or more years.
“At this point, much of the work of the Commission is centered on modelling out the various approaches for an enhanced COLA benefit. It goes without saying that our hope is to create a new benefit that will help the greatest number of retirees. The longer someone has been retired, the harder they have likely been hit by inflation,” explains Mass Retirees President Frank Valeri, who was appointed to the Commission by Governor Maura Healey. “In developing the Commission’s policy recommendation, it is important to remember that whatever is proposed must then be approved by the legislature and then approved locally before taking effect. This means that, like all other aspects of retirement benefits, cost is a major factor.”
In addition to formulating the new enhanced benefit, the Commission is also working on recommendations to improve the State/ Teacher COLA base which has been set at $13,000 since 2012.
“Members know that Mass Retirees has long argued that the success of our public pension investments must be shared with the beneficiaries. My hope is that we can establish a process by which a portion of excess investment gains can be dedicated toward incrementally improving the State and Teachers’ COLA base over time,” continued Valeri. “There is no getting around the fact that these benefits are expensive. However, those costs must be balanced with the needs of retirees. The recent spike in general inflation, combined with higher health insurance costs, place great strain on retirees. Our members need relief, which is why we pushed for the creation of the Special Commission.”
Meeting regularly since January, the Commission is likely to issue a report and recommendations to the legislature early this fall. Those recommendations must then be passed by the legislature and signed into law by the governor prior to taking effect. Due to the requirements of Prop. 2 ½, local acceptance of any new benefits is required prior to taking effect for local retirement systems.