The Cost-of-Living Adjustment (COLA) is 3.4% for 2024 and was approved by the Board of Fire and Police Pension Commissioners on April 18, 2024. The COLA will be effective July 1, 2024, and all eligible pensioners and Deferred Retirement Option Plan (DROP) participants will receive an increase beginning with the pension payment/DROP account deposit dated July 31, 2024. For new pensioners and DROP entrants in Tiers 3-6, the first year’s COLA is prorated based on the number of complete months since the pension effective date, therefore these members may not receive the full 3.0%.
- Tiers 1 & 2 retirees and beneficiaries will receive 3.4%. Tier 2 DROP participants will receive 3.0%.
- Tiers 3 & 4 retirees, beneficiaries, and DROP participants will receive up to 3.0%.
- Tiers 5 & 6 retirees, beneficiaries, and DROP participants will receive up to 3.0% and the remaining 0.4% will be stored in the COLA bank*, which can be applied in future years when the CPI is below 3%.
*Must have retired or entered DROP with a pension effective date prior to June 2, 2024, in order to have an available COLA bank balance.
Consumer Price Index/Bureau of Labor Statistics
The COLA is based on the annual change in the Consumer Price Index (CPI) as published by the U.S. Bureau of Labor Statistics (BLS). Pursuant to the City of Los Angeles Charter/Administrative Code, the 2024 COLA was calculated based on the Los Angeles-Long Beach-Anaheim area using a 12-month period from March 2023 through February 2024.
How does this affect LAFPP Pensioners?
This is an example of how a monthly pension benefit of $6,000 would be affected by this year’s COLA of 3.4%:
For Tiers 1 – 2
If 3.4% of $6,000 = $204.00
($6,000 x 0.034) ($6,000 + $204.00)
Then the monthly pension benefit increases to $6,204.00
For Tiers 3 – 6
If 3.0% of $6,000 = $180.00
($6,000 x 0.030) ($6,000 + $180.00)
Then the monthly pension benefit increases to $6,180.00
Discretionary COLA
The Board also approved sending a letter to the Los Angeles City Council requesting a 3.45% Discretionary Cost of Living Adjustment (DCOLA) for eligible pensioners of Tiers 3,4, 5 and 6. As established in Charter Sections 1516(c), 1616(c), 1716(c), and Administrative Code Section 4.2016(c):
- An adjustment can be made no more than once every three years for the prior three-year period and is prorated on a monthly basis;
- The adjustment for Tier 5 and Tier 6 pensioners is withdrawn from the individual’s COLA bank;
- The adjustment can be no greater than one-half (1/2) of the difference between the CPI and the actual increase granted for each of the preceding three years;
- An actuarial report of the cost of the proposed increase must be obtained and published by the Board’s actuary prior to the Council adopting the ordinance;
- The City Council must adopt an ordinance providing for this adjustment by a two-thirds (2/3) vote. The Council cannot adopt the ordinance unless 30 days have passed since its presentation to the Council and after a public hearing thereon. The ordinance must be published by November 30 and becomes effective the following January 1; and,
- Adjustments are not retroactive.
Questions?
For questions regarding the COLA, please contact the Retirement Services Section at (213) 279-3125, (844) 88-LAFPP, ext. 3125, or via email at RS@lafpp.com.
For detailed information on the calculation of the CPI, please visit the BLS website at www.bls.gov/cpi or call (202) 691-7000.
