The Illinois Pension Code provides retirees with an automatic increase in annuity, known as a Cost of Living Adjustment (COLA). The purpose of the COLA is to ensure that the purchasing power of your pension is not eroded by inflation; so as inflation increases, so does your pension.

Employee COLA Eligibility

To first determine your eligibility and entitlement to a COLA you have to know whether you are a Tier 1 employee or a Tier 2 employee.

• A Tier 1 COLA is compounded at 3% of your current pension amount
• If your pension begins before age 60 with less than 30 years of service — your first COLA will begin January 1 following your 60^th birthday.
• If your pension begins at age 60 or with 30 or more years of service — your first COLA will begin January 1 following your one-year anniversary of receiving a pension payment.
• A Tier 2 COLA is the lower of 3% of the base pension or one-half of the Consumer Price Index (CPI)
• If your pension begins before age 67 — your first COLA will begin January 1 after you reach age 67.
• If your pension begins on or after age 67 — your first COLA will begin January 1 following your one-year anniversary of receiving a pension payment.

Spouse COLA Eligibility

If you die, your qualifying spouse is also entitled to COLA increases.

• If you were a TIER 1 employee — your spouse base annuity will receive a 3% compounded increase beginning January 1 following the one-year anniversary of your spouse receiving a pension payment.
• If you were a TIER 2 employee — your spouse base annuity will receive the lower of 3% or one-half of the CPI beginning January 1 following the one-year anniversary of your spouse receiving a pension payment.

Child Annuities do not receive a COLA.

Disability Recipients do not receive a COLA.