A COLA is a Cost of Living Adjustment for Social Security and Supplemental Security Income Benefits. Not all employers offer a COLA. Learn more about eligibility and how COLA is calculated on this page.
On Nov. 18, 2011, the Rhode Island General Assembly enacted into law the Rhode Island Retirement Security Act of 2011 (RIRSA). RIRSA suspended a COLA for all State Employees, Teachers, Judges, State Police, BHDDH Nurses, and Correctional Officers until the plans’ funding level for all groups, calculated in the aggregate, exceeds 80 percent.
For MERS, COLAs were suspended until the funding level of the individual plan exceeds 80 percent—MERS plans are not aggregated.
In the 2023 Legislative session, the Rhode Island General Assembly enacted into law H5200Aaa, Article 12 - affecting COLA adjustments for eligible members. The enacted budget article changed the COLA from being paid every four years, if the funded status is under 80%, to twenty-five percent (or 1/4th) of the benefit adjustment each year until a funded status of 80% is reached. The amendment to Rhode Island General Law (RIGL) under Article 12 goes into effect on January 1, 2024, and only applies to State Employees, Teachers, and MERS units that have elected COLA. The changes do not apply to retirees of the State Police or Judicial plans.
The indexed cap on which the COLA is applied was not affected by Article 12 and the COLA amount every year will continue to be determined by existing RI General Law as of September 30 of the prior year.
The COLA rate for a given year will continue to be calculated using 50% of the previous five-year average investment return minus 5.00%, and 50% of inflation as measured by the CPI-U Consumer Price Index for All Urban Consumers, then applied to a portion of your pension benefit determined by the current RI General Law.
Pursuant to existing RI General law, COLAs are paid the month following the member's anniversary date of retirement. As an example, if you retired in January, and are eligible for a COLA, you will receive your COLA in your February pension payment.
Eligibility for a COLA was also not affected by the enactment of Article 12. Thus, the existing eligibility rules remain applicable. So, if you are a retiree of a plan that offers a COLA, you become eligible to receive a COLA when you reach Social Security Normal Retirement Age (SSNRA) or three years after you retire, whichever is later. When eligible, you will receive your COLA annually at your retirement anniversary date, plus one month.
The important takeaway from this legislative change is that the twenty-five percent (or 1/4th) of the annually determined COLA replaces the 'every 4-Year COLA' provision for most plans until those plans reach 80% funded. Eligibility determination, COLA cap, and amount remain unchanged from current legislation enacted in 2011.