A retiree Cost of Living Adjustment (COLA) is based on the average CPI (Consumer Price Index) inflation utilizing a 2-year average of the San Francisco CPI and Los Angeles CPI. Any approved COLA is started with the April 1 retiree benefit each year.
For Tier 1 retirees, the maximum annual COLA is 3% (with carryover). Should the CPI based inflation rate exceed 3% in a given year, any overage will be "banked" and utilized for future years' COLAs when the inflation is less than 3%.
For Tier 2 and Tier 3 retirees, the maximum annual COLA is 2% (with no carryover). Should the CPI based inflation rate exceed 2% in a given year, there is no provision to bank any amount in excess.