A cost-of-living adjustment (COLA) is an annual adjustment applied to your retirement income to reflect changes in the economy (inflation). Most DRS retirement plans offer a COLA, but Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement. View the 2024 COLA percentages by retirement date and plan. When will I receive the 2024 COLA? LEOFF Plan 1 COLAs take effect April 1 and start with April 30 benefit payments. All other DRS Plan COLAs take effect July 1 and start with July 31 benefit payments. You need to be retired by July 1 for at least one year to be eligible for a COLA. Once you’re eligible, you’ll receive any COLA starting with the pension payment issued at the end of July, and every year after. You don’t need to apply to receive the COLA – it’s automatic. How much will the COLA be? The maximum annual COLA you can receive for most DRS plans is 3%. If inflation that year is above 3%, the additional amount is applied to future adjustments (called COLA banking). Any year inflation is lower than 3%, the COLA can pull from banked percentages in prior years. This happens automatically and the adjustment is made for you. You could receive a different adjustment each year, depending on the amount available in your COLA bank. Will PERS 1 and TRS 1 receive a benefit increase? Certain retirees in Plan 1 of the Public Employees’ Retirement System and Plan 1 of the Teachers’ Retirement System (PERS 1 and TRS 1) will receive a one-time benefit increase in July 2024 as a result of House Bill 1985 (pending the governor’s signature). More about COLAs [reblex id='14232']

At the end of July, state employees may notice a 3% increase to their paycheck. This increase is thanks to legislation that passed in March 2023 and is intended to help you with the cost of inflation. One of the best things about getting a paycheck increase is that it gives you more flexibility with your budget. You can use the extra money to:  pay off credit card debt save for a big vacation open an account or add to a child’s 529 college savings fund increase your DCP contributions for retirement No matter how you decide to use the extra funds, setting aside a small amount of $50 or $100 to an account every month can add up overtime and help you achieve any goal. Consider a percentage increase for your DCP contributions If you’re currently contributing a percentage of your paycheck to DCP, your account will already benefit from this increase. Just know that now is the perfect time to raise that number. By increasing your percentage, your DCP account will see faster gains in the upcoming years. At the same time, you’ll still see an increase in your take-home pay. It’s a win-win. Example: if you’re contributing 3% now, consider increasing it to 4% or 5%. How to change your contributions: Log in and select your DCP account At the Voya main menu select Accounts and then Washington State DCP Select Contributions & Savings, then Manage Contributions The page will show what your current contribution rate is. Select Update My Contributions to make the change. Log into your account Don’t have an account? It only takes a few minutes to enroll in DCP. Got a few minutes? Listen to the DCP podcast episode In episode 11, you’ll find out how DCP can help you save for retirement. The 17-minute episode explains how taxes are applied, the importance of contributing with a percentage of your income and tools for maximizing your investment. You can also read the transcript of the episode.

As a retiree, it’s important to know how your pension works. There are certain rules in place that allow your pension to grow over time with the cost of inflation. All Plan 2 and 3 retirees are eligible to receive a COLA every July. But not all plans or members are eligible for the inflation protection of benefit indexing. The purpose of benefit indexing is to help the value of your pension benefit keep up with inflation before you start collecting it. Here are the key differences between cost-of-living adjustments and benefit indexing. Cost-of-living adjustment (for all Plan 2 and 3 members) Each year after you retire, DRS may adjust your pension payments annually up to 3% based on inflation. If the cost-of-living has gone up, pensions receive a cost-of-living adjustment (COLA), regardless of how many service credit years you have. If you're in Plan 2 or 3 and have been retired at least one year, you'll receive a cost-of-living adjustment (COLA) automatically each July — no matter how many years you worked. The amount is based on the prior year’s Seattle area inflation index (CPI-W) and it may be less than 3% if inflation was lower. Read more about COLAs Benefit indexing (for Plan 3 and LEOFF Plan 2 members) Benefit indexing is a form of inflation protection you may be eligible for based on what plan you are in and the number of years of service you have. It takes into consideration that your pension is calculated based on a salary amount. Eligibility for benefit indexing requires you to: Be in Plan 3 or LEOFF Plan 2 and Have at least 20 service credit years before you stop working Separate before reaching normal retirement and delay receiving your pension benefit. For every month you delay collecting your pension, your benefit amount will be increased by 0.25%. Benefit indexing stops once you have reached your normal retirement age. Once you retire, you will also be eligible to receive an annual maximum 3% COLA., as described above. ExampleFrancis is a Plan 3 member who is 64 years old, with 20 service years and an average monthly salary of $5,000. Their Plan 3 benefit calculation is: 1% x 20 years x $5000. This would provide Francis with $1,000 per month. In addition to a monthly pension, Francis also has an investment account to draw from in retirement. Francis also has the option to stop working prior to age 65 but choose not to receive a pension benefit until their first eligible unreduced date of age 65. During that time, their pension will grow. Here are two scenarios of how that could look: Scenario 1: Stop working at age 64Start collecting a pension at age 65The pension benefit increases about 3% in one year (.25 x 12 months = 3)The pension is $1,030/month Scenario 2: Stop working at age 65Start collecting a pension at age 65The pension benefit calculations is: 1% x 21 years of service x $5,000The pension is $1,050/month A note about Plan 3: Plan 3 has two separate accounts: An employer-funded pension, and an investment account you fund with your contributions. The main reasons customers choose Plan 3 are personal control and growth potential. Plan 3 customers have separate pension and investment accounts, which means they can withdraw funds from one without affecting the other. In the example above, Francis could withdraw an income from the investment account at any age once they separate from service.

Did you know that you started earning a pension benefit when you were hired into public service in Washington state? If you didn’t know until just now, we understand. A new job can be overwhelming – loads of information is served up to you all at once. You may have overlooked, or not had time to absorb the information your employer gave you about retirement benefits through DRS. But don’t worry; we’ve got you covered! Just follow this beginner’s retirement guide to help you understand your benefits and the decisions you need to make as a new hire. Enroll in a plan For some plans, you are automatically enrolled by your employer. This is often the case when a plan only has one active plan option at a time. If you don’t see your plan listed here, you can skip this section. Public employees, teachers and school employees: PERS, TRS or SERS member? If so, you have 90 days to choose a retirement plan. The Plan Choice section can help you decide which plan is right for you. Choose a plan Español (Spanish) Law enforcement, firefighters, Washington State Patrol: LEOFF and WSPRS members can complete this enrollment form. Higher education employees: If you are eligible for HERP, see your Plan 3 options. Answers to the questions new hires ask most often System, plan, what? DRS administers 15 different retirement plans to public service members throughout Washington. Each plan uses system and plan number labels. You don’t need to memorize them all, but knowing about them will help you navigate the DRS website in the years to come. Why does this matter? It’s good to know which plan and system you are in, so you’ll know immediately if a new rule or piece of legislation applies to you. Each system is a type of employment covered by the plan. Here are all the systems: Public Employees’ Retirement System (PERS) Teachers’ Retirement System (TRS) School Employees’ Retirement System (SERS) Law Enforcement Officers’ and Fire Fighters’ Retirement System (LEOFF) Washington State Patrol Retirement System (WSPRS) Public Safety Employees’ Retirement System (PSERS) In addition to systems, each DRS retirement plan is labeled with a plan number: 1, 2 or 3. Each number represents different rules and plan structures. For example, Plan 2 is always a pension plan that you and your employer both contribute to. Plan 3 is always a pension program your employer funds and a separate investment program you fund. Plan 1 is closed. What about DCP? Deferred Compensation Program is not actually a plan or system, but it is a separate voluntary savings program administered by DRS. If your employer doesn't offer Washington's DCP, ask about other additional retirement savings programs you can enroll in to increase your income in retirement. How do I set up my DRS online account? After receiving your first paycheck from your employer, you can set up access and view your account information online. More about online accounts. Create your account Why was I enrolled in DCP? How do I opt out? State agencies, higher educations and a few additional public employers have DCP automatic enrollment for new hires. Read more about automatic enrollment, including instructions for how to modify or opt out of your enrollment. Do I have to contribute to a retirement plan? Yes. A retirement plan is a required part of the benefits package for Washington public service employees. Both Plan 2 and Plan 3 offer a lifetime pension benefit. The pension amount depends on how long you work in public service and your salary. Can I change my contribution rate in Plan 2 or Plan 3? Plan 2: No. Your contribution rate is determined by the state Pension Funding Council. The rate can change every two years. See the most recent rates. Plan 3: You can only change your contribution rate if you change employers. You select (or default into) a rate when you first enroll in your plan. See all Plan 3 rates. How do I add a beneficiary? In the event of your death, DRS needs to know where to send your retirement account balance. Choose your beneficiaries now. Make this choice through your online account once you are enrolled in a plan or complete a paper form. More resources Podcast episodes for new hires: Ep 11 – How to save for retirement with DCP Ep 14 – Choosing between Plans 2 and 3 Ep 15 – How to choose a financial advisor Ep 16 – Options for those who only work a few years Additional podcasts covering many other retirement topics are available on the Fund Your Future with DRS webpage. Additional information View a recorded webinar on choosing a plan, or see all available webinars. Every plan has a guide page. Read about your plan. About – DRS serves current and former public employees in 15 different retirement plans. Updates – Get email or text news from DRS. On topics you choose. DRS has a glossary, available anytime you need it.