Sunday, January 19, 2014

Your [Diminished] Cost-of-Living Adjustment (COLA) via Senate Bill 1 (from TRS)



For the last few weeks, TRS has been in the process of creating a calculator on its website that is designed to help Tier I members estimate their first cost-of-living adjustment after the new pension law takes effect on June 1, 2014.

The COLA Calculator was added to the TRS website today and is now available to members. All Tier I members will receive an email alert tonight announcing the addition of the calculator. Here is a direct link to the new calculator: http://trs.illinois.gov/members/COLA/COLACalculator.aspx

A member can enter his/her individual information into the calculator and it will estimate the amount of his/her first COLA under the new law. However, the calculator has limitations. TRS cannot estimate future COLAs beyond the first increase. The amount of all COLAs after the initial raise depends on the rate of inflation in the economy, and that rate is impossible to predict.

Tier I members can compare this COLA estimate with an estimate of their first COLA after June 1, 2014 as calculated under the old law, by using the COLA formula found in the TRS Tier I Member Guide on page 19.  You can find the Member Guide on the web site as well --http://trs.illinois.gov/members/pubs/tier1guide/guide.pdf.

For active Tier I members, the formula used to calculate their initial pensions upon retirement will not change under the new law. However, the annual salary rate used to determine a key component of that formula – the final average salary – will be capped.

The formula for calculating a member’s initial retirement annuity can be found in the TRS Tier I Member Guide on page 13. For more information about the new salary cap for active Tier I members, and the other provisions of Public Act 98-0955, please go to the TRS website.

Rich Frankenfeld
TRS Director of Outreach
2815 W. Washington St.
PO Box 19253
Springfield, IL   62794-9253

More about COLAs: Click Here.


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