Earlier this year, we wrote about Cost of Living Adjustments (COLA). To recap, a COLA is an adjustment in the amount of a pension benefit to account for inflation. Since the price of almost everything is constantly going up due to inflation, pension benefits lose value over time if they are not adjusted for the cost of living. Additionally, senior citizens pay more for health care expenses, which typically rise much faster than inflation. Some pension plans have COLAs automatically built into them. Other plans can only have a COLA if the plan meets certain financial conditions. Finally, some plans do not receive any regular COLAs and COLAs can only be granted by the actions of the state legislature. This is where we want to focus today.
This year, both New Hampshire and Oklahoma considered legislation that would have granted a true Cost of Living Adjustment to retired public employees. In both states, it has been a decade since retirees last received a COLA. In New Hampshire, House Bill 1756 would have offered a one-time allowance of $500 to certain retirees, as well as a 1.5 percent COLA. In Oklahoma, House Bill 2985 would have granted an 8 percent COLA beginning in November 2018.
Unfortunately, neither New Hampshire nor Oklahoma passed the COLA bills as introduced. In both states, the bills were amended to provide one-time stipends rather than true COLAs. In New Hampshire, HB 1756, as amended, will provide a one-time $500 stipend to retirees who have at least 20 years of creditable service, have been retired for at least 5 years, and whose benefit is $30,000 or less. In Oklahoma, HB 2985, as amended, will provide a one-time stipend of between $350 and $400, depending on the retiree and the pension system.
While it is disappointing that neither state passed a true COLA, these bills do recognize that retirees need help to make retirement affordable. In both states, retirement security advocates plan to pursue a true COLA again next year. Nurses, librarians, sanitation workers, and other public employees spent their careers serving their communities. Their pensions are a form of compensation they earned during their service. A COLA is a recognition that they deserve support throughout their retirement, just as they supported their communities throughout their careers.
