Cost-of-Living Adjustment (COLA)
Select a section below to view Cost-of-Living Adjustment information.
Each July, PERA adjusts the gross pension benefits of all eligible retirees to include a Cost-of-Living Adjustment (COLA) and notifies the eligible COLA recipients via mail. The COLA is calculated only on pension amounts paid for service credit under the Public Employees Retirement plan. COLAs for Magistrate Retirement plan or the Judicial Retirement plan members are paid as statues and rules allow. For reciprocity retirees with Educational Retirement Board (NMERB) benefits, the COLA is calculated only on the PERA benefit portion. NMERB will calculate the COLA on the NMERB benefit portion when you are eligible to receive it.
Pension reform enacted by Senate Bill 72 during the 2020 legislative session requires that PERA use a statutory formula to calculate the annual COLA rate. The formula is as follows:
[Return on Actuarial Value of Assets minus COLA Hurdle Rate] multiplied by Funded Ratio equals Initial COLA
Statute defines the hurdle rate as the investment rate of return required to fund a cost-of-living adjustment in excess of one-half percent, as determined by the association's actuaries.
COLA cannot be less than 0.50%.
Maximum COLA depends on funded ratio. If funded ratio is less than 100%, maximum COLA is 3.00%.
If funded ratio is greater than 100%, maximum COLA is 5.00%.
The statutory Cost-of-Living Adjustment (COLA) for eligible retirees as of July 1, 2026, are as follows:
2.50% for retirees who retired with at least 25 years of service (and disabled retirees regardless of service) whose annual pension is $25,000, or less; or
2.50% for a closed group of retirees who attained at least age 75 prior to July 1, 2020; or
0.50% for eligible retirees who do not meet the above-mentioned two qualifying factors.
There is a two full-calendar year COLA eligibility period for members who retire under normal retirement.
If you retire due to a disability or if you are at least age 65 prior to your first COLA eligibility date, the COLA eligibility period is reduced to one full-calendar year.
The COLA will be paid on the last business day of July following the full-calendar year. A full-calendar year is January 1st through December 31st. Eligible COLA recipients receive a notification letter in July each year advising them of the increase in their pension payments.
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