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State retirees and cost-of-living increases for 2014

During the 125th Legislature, a three-year freeze on cost-of-living adjustments for retired state, judicial and legislative employees and teachers was put into effect as part of a package of changes to the state pension program. That freeze has expired and eligible retirees will see a COLA increase this September if the Consumer Price index for Urban Consumers is positive at the end of June. COLA increases take place each September if the CPI-U is positive at the end of each preceding June.

The increase to the retirement benefit would be permanent. The maximum possible COLA benefit is 3 percent of the first $20,000 of annual retirement benefits.   

This is also the final year for the annual lump sum non-cumulative COLAs the Legislature approved for each of the years the regular COLA was frozen. The annual lump sum non-cumulative COLA is contingent on the availability of sufficient undedicated revenue at the end of each fiscal year.

It’s expected that funds will be available for the annual lump sum non-cumulative COLA this year, as they have been in the previous two years. The annual lump sum non-cumulative COLA would be based on the June 30, 2013 CPI-U of 1.8 percent. It would be paid to retirees who would have been eligible for the regular COLA in 2013.

The annual benefit on which the lump sum non-cumulative COLA would be calculated is increasing from $20,000 to $30,000 this year, thanks to a law passed by the 126th Legislature. The maximum payment would be 1.8 percent, or $540. This final lump sum non-cumulative COLA would be made in addition to the regular COLA that resumes in September.

The Maine Public Employees Retirement System has more information.

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