This graph highlights the following scenarios, changes to current employee benefits only, changes to current employee benefits and retiree COLA, and changes to current employee benefits and with frozen retiree COLA.
The changes to Current Employee Benefits are as follows:
Changes to retirees only involve adjusting the cost of living (COLA) benefit increase. Instead of receiving a 3% compounding COLA every year, the proposal changes the COLA to a simple 3% of half of the Consumer Price Index (CPI), whichever is lower. The CPI is expected to increase at 3% annually and retirees will receive a simple 1.5% COLA. When this change is added to changes for current employees the funded status will increase to 83.3% by 2040 (Change included in blue and green lines).
The green line institutes a COLA freeze when the funded status is below 80%. While frozen a retiree will only receive a 3% compounded COLA every 5th consecutive year. When the funded status climbs back above 80% funded the retiree will continue receiving an annual simple 3% COLA or half the CPI. When a frozen COLA is added to the changes the funded status will be 94.4% funded by 2040 (Change included in blue line).