# Cost of Living Adjustment

You may receive an annual Cost of Living Adjustment (COLA) to your retirement or disability benefit in accordance with the following schedule:

• If you joined ERB prior to July 1, 2013 (i.e., members in Tier
1 and Tier 2), you may begin receiving a COLA on July 1 of the

year in which you reach age 65 or July 1 of the year following
your effective retirement date, whichever date is later.

• If you joined ERB on or after July 1, 2013 (i.e., members in
Tier 3) you may begin receiving a COLA on July 1 of the year

in which you reach age 67 or July 1 of the year following your
effective retirement date, whichever date is later.

If you are eligible for a COLA, the amount depends on the annual change
in the Consumer Price Index (“CPI”). If there is no increase in the CPI, or
the CPI is negative, a COLA is not paid; however, if the CPI is negative,
retirement benefits will not be decreased.

When the Educational Retirement Fund is fully funded (i.e., the funded
ratio is 100%), if the increase in the CPI is less than 2%, the COLA will
be the same amount as the increase in the CPI. If the increase in the CPI is
2% or greater, the COLA will be one-half of the CPI increase, except that
it will not exceed 4% or be less than 2%. However, until the Educational
Retirement Fund is 100% funded, the COLA will be reduced as shown in
the examples below. The reduction is tied to the median annual retirement
benefit. The median benefit is recalculated after the end of each fiscal year
(i.e., after June 30 each year).

When the funded ratio is 90% or less, the COLA for retirees whose
annuity is at or below the median who have 25 or more years of service
credit at retirement will be reduced by 10%. For retirees whose annuity
is either (i) greater than the median or (ii) who have less than 25 years of
service credit at retirement, the COLA will be reduced by 20%. When the
funded ratio exceeds 90% but is less than 100%, the COLA for retirees
who had 25 or more years of service credit at retirement whose annuity is
equal to or less than the median adjusted annuity will be reduced by 5%.

For all other retirees, it will be reduced by 10%. When the funded ratio is
100%, the COLA reduction ceases.

The following examples are based on a 2% annual increase in the CPI:

**Funded ratio is 90% or less**

• Retirees with benefits at or below the median and with 25
or more years of service, the COLA would be 1.8%.

• For all other retirees, the COLA would be 1.6%.

**Funded ratio exceeds 90% and is less than 100%**

• Retirees with benefits at or below the median and with 25
or more years of service, the COLA would be 1.9%.

• For all other retirees, the COLA would be 1.8%.

**Funded ratio is 100% or greater**

• For all retirees, the COLA would be 2%. The reduction ceases.