Showing posts with label cola cap. Show all posts
Showing posts with label cola cap. Show all posts

COLA This Year?

Posted on
Will there be any COLA this year?
Every year, we calculate and announce the retiree COLAs in mid-January. We won’t have data for the 2019 COLA until mid-January of 2019 because the information necessary to make that calculation is based on a comparison of changes from 2017 to 2018. The rate calculation is based on 80% of the percentage increase in the average CPI from one year to the next with a maximum increase of 5% (minimum 0%).* We will send you a notice, either in the mail or in your MOSERS Document Express online mailbox, during the month when you get your COLA.

Watch our website in January for more information. Learn more on the COLA page and in the upcoming issue of RetireeNews coming in late December.

* If you retired under the MSEP, and were hired before August 28, 1997, your COLA will be determined based on the annual COLA calculation except that you will receive a minimum 4% COLA (maximum 5%) until accumulated COLAs reach 65% of your initial (or original) benefit. This is called your COLA cap. After your benefit has increased to the COLA cap amount, your COLA will be between 0-5% each year.

Print Friendly and PDF

COLA Cap

Posted on
With regard to the following statement in the most recent MOSERS emailed information:
If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount.
Question: Please explain in more detail how the COLA cap is figured.
Is the amount of the annual COLA, for example, a 4% COLA in 2015, again in 2016, again in 2017, and again in 2018 (that amounts to about $40/month in each of those years) multiplied by 12 to get the total annual COLA ($480) for each of those years and then all of the annual totals are added together to determine when the 65% limit has been reached?
For ex.: $40 X 12 X 4 = $1920
Or perhaps it’s figured as follows: $40/mo. COLA x 8, 9, 10, 11, 12 years etc.
If not, please explain in detail how the COLA cap of 65% is figured. Thank you. 
The COLA cap* is calculated based on the initial base benefit amount, rather than on the COLA itself. Your estimated date to reach the COLA cap can be found on your annual benefit statement in the COLA section. It says “Estimated Date to Reach 65% COLA Cap….” and a date. Typically, it is around 12-13 years after you’ve retired.

Example of Calculating the 65% COLA Cap:

$1,000 (Initial Base Benefit) x .65 (65%) = $ 650 (COLA Cap) 

So, when you look back at your initial base benefit, once it has increased by 65% due to COLAs, you will no longer get the minimum 4% COLA; instead, your COLA will be based on 80% of the increase in the CPI and be between 0 and 5% each year. For example, for those who have their COLA calculated this way, it is 1.704% in 2018.

*The COLA cap does not apply to MSEP 2000 members; it applies only to members of MSEP hired prior to 8/28/97, who receive a minimum 4% COLA until meeting their COLA cap.

Print Friendly and PDF

Base Benefit & COLA Cap

Posted on
Where can one find one's base benefit for the purpose of determining the 65% of base benefit when COLA's will end?
Your COLA does not end once you meet your COLA cap*—it is simply calculated differently. If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount. Then, your annual COLA will be equal to 80% of the percentage increase in the average Consumer Price Index (CPI) with a minimum of 0% and maximum of 5%.

Your estimated date to reach the COLA cap can be found on your annual benefit statement in the COLA section. It says “Estimated Date to Reach 65% COLA Cap….” and a date. Typically, it is around 12-13 years after you’ve retired.

*The COLA cap does not apply to MSEP 2000 members; it applies only to members of MSEP hired prior to 8/28/97, who receive a minimum 4% COLA until meeting their COLA cap.
Print Friendly and PDF

MSEP COLA

Posted on
Did the governor change the 4% cola on the old plan (MSEP)? 
No. The provisions in SB 62 have NO impact on members of MSEP or MSEP 2000. What you may be referring to is one of the “offsets” in SB 62 which contribute to making the MSEP 2011 vesting reduction (from 10 years to 5 years) cost neutral for the state. These offsets apply only to new terminated-vested members of MSEP 2011, effective January 1, 2018—one of these provisions is that the first cost-of-living adjustment (COLA) for such members will be applied on the second anniversary of their retirement (rather than the first anniversary).

The offsets have no impact on current employees, retirees, or members of MSEP 2011 who retire directly from active state employment.

To review information about COLAs for other members, the COLA calculation depends on which plan you are in. If you retired under MSEP and were hired before August 28, 1997 and were vested in MSEP, you will receive a minimum 4% COLA until your accumulated COLAs are equal to 65% of your initial base benefit. This is called your COLA cap. Upon reaching the cap, your COLA will be calculated like other retirees and will range from 0% to 5% each year depending on the increase in the Consumer Price Index.

The 2017 COLA rate for MSEP retirees who have reached their COLA cap, MSEP members who were first hired on or after August 28th, 1997, and members retired under MSEP 2000 is 1.010%.

Print Friendly and PDF

2017 Cost-of-Living-Adjustment

Posted on
Will I get a raise this year?
Yes, if you are referring to the cost-of-living-adjustment (COLA) for eligible retired members and their surviving beneficiaries. As we announced in January, the COLA for 2017 is 1.010%. This will be effective for MSEP retirees who have reached their original 65% COLA cap, or who were first hired on or after August 28th, 1997, and for members retired under MSEP 2000 regardless of date of hire.

The COLA is payable on the anniversary of your retirement date, except for:
Retirees who converted from MSEP to MSEP 2000 during the conversion window in 2000 will have COLAs payable in July
Retirees who elected a BackDROP* will have COLAs payable on the anniversary of the BackDROP date

For more information, including how the COLA rate is calculated, and a helpful video, please see the COLA page on our website.

*BackDROP is available only to general state employees who are members of MSEP & MSEP 2000 and who work at least two years beyond normal retirement eligibility. 

Print Friendly and PDF

BackDROP & COLAs

Posted on
If you are over the age of 62, have completed 5 years of backdrop, and go out under the old MSEP plan, do you get the 4% COLA until you reach 65 yrs? The rumor is that once you reach age 62 the 4% COLA stops.
If you retire under the MSEP and were hired before August 28, 1997, you will receive a COLA of at least 4% each year (maximum 5%) until you reach your COLA cap. The COLA cap is when the sum of your COLAs equal 65% of your initial benefit amount. COLAs earned during the BackDROP period do count toward the 65% cap. In general, it takes approximately 12-13 years to reach the COLA cap. Then, your annual COLA will be equal to 80% of the percentage increase in the average Consumer Price Index (CPI) with a minimum of 0% and maximum of 5%.

The cost-of-living adjustment (COLA) for 2017 is 1.010%. This will be effective for MSEP retirees who have reached their 65% COLA cap or who were first hired on or after August 28th, 1997 and for members retired under MSEP 2000, regardless of date of hire. You can see a history of annual COLA rates on MOSERS’ website and also watch a short video on COLAs.

You may be confusing COLAs and the “Temporary Benefit”.  The temporary benefit is NOT available to members who retire under MSEP but IS available to members who are eligible for and retire under the Rule of 80/”80 & Out” in MSEP 2000. In addition to their base benefit, such members receive a temporary benefit until they reach age 62.  At age 62, the temporary benefit ends, but the base benefit continues for life.  You can compare plan provisions in the MSEP and MSEP 2000 Summary of Plan Provisions chart. Often members must weigh the value of the guaranteed minimum COLA in the MSEP against the value of the temporary benefit in MSEP 2000 to see which is best for them. You can use our Comparison Calculator to see how the dollar value of each adds up over time.

All plan provisions are based on state law. We understand they are rather complicated and we are available to help explain further over the phone or during and in-person appointment. We can also help you compare benefit estimates based on different termination dates. View our Contact Us page to reach a MOSERS benefit counselor.

Print Friendly and PDF

MSEP 2000 COLA Cap?

Posted on
How do I determine when or if I have met my MSEP 2000 COLA cap?
The COLA cap does not apply to MSEP 2000 members; it applies only to members of MSEP hired prior to 8/28/97, who receive a minimum 4% COLA until meeting their COLA cap.

They meet their COLA cap once their monthly benefit is equal to 165% of their initial or original benefit. This does not mean those members no longer receive an annual COLA. It means that it will be calculated differently: MSEP members who have already met their COLA cap and all MSEP 2000 retirees receive an annual COLA based on 80% of the percentage increase in the average CPI-U from one year to the next, with a minimum of 0% and maximum of 5%.

You can read more about how COLAs are calculated on our website, and also watch a short video. MOSERS will announce retiree COLAs for 2016 in mid-January.

Print Friendly and PDF

COLA Cap

Posted on
The post from April 27, 2005 describes an increase in the monthly benefit for years worked after age 65. Do these increases “count against” the 65% ‘Cap’ on the minimum 4% increases for those workers hired prior to August 28, 1997?
Note: the post referenced is here.

Yes, all COLAs accrued count towards the 65% cap for eligible members of the MSEP.

Print Friendly and PDF

COLAs in the Current Economy

Posted on
Is it true that Cost of Living raises for pensions of 4% have been happening every year, even in this bad economy?
Cost of living adjustments (COLAs) for those retirees who retired under the MSEP, who were hired prior to 8/28/97, and who have not met their COLA cap receive a 4% COLA each year. Those retirees who retired under the MSEP, who were hired on or after 8/28/97, who have met their COLA cap, and MSEP 2000 retirees receive an annual COLA that is based on 80% of the percentage increase in the average CPI from one year to the next. Typically COLA caps are met within 12-13 years. You can read more about COLAs on our website.


Print Friendly and PDF

COLA Cap

Posted on
I retired from the State of Missouri under MSEP and I was hired before Aug. 28, 1997. I understand I will receive a minimum 4% COLA until my accumulated COLAs reach 65% of my original benefit. How will I know when I reach the 65% limit?
Your estimated date to reach the COLA cap can be found on your annual benefit statement in the COLA section. It says “Estimated Date to Reach 65% COLA Cap….” And a date. Typically is around 12 years after you’ve retired.

Print Friendly and PDF