The “New” FRS COLA

As of July 1, 2011 there will be some changes made…you will receive no further credit for COLA for the five years after July 1, 2011.


As you are aware, one of the better benefits within the Florida Retirement System has been the automatic 3% Cost of Living Adjustment that FRS adds to your Pension checks each year.  Over the course of a 24 year retirement, the COLA would almost double your annual pension, which would hopefully allow your standard of living to keep up with rising prices and inflation.

COLA is a simple process.  Each year, beginning on July 1, your pension check is increased by 3% more than what it had been for the previous 12 months.  That 3% compounds each year, meaning next year’s 3% pension increase will be added to last year’s pension increase, which was added to last year’s pension hike, and so on.  To illustrate, let’s assume you Pension check is $2500 at retirement.  Next year, it will be $2500, plus 3% ($75), so your pension check will be $2,575.  Year three FRS will add 3% to the Second year amount which is $82.50, so the third year checks will be $2,657.50, and so forth.  If you retire at 62, by the time you reach age 85 your monthly pension check will be almost $4,900!

As of July 1, 2011 there will be some changes made.

For those already retired, or those in the DROP, your benefit will remain the same!  No changes to your COLA will happen.  You will still get your 3% per year.

For those still working, you will receive no further credit for COLA for the five years after July 1, 2011.

This cut will reduce your annual COLA going forward for each year you continue to work.  The calculation is simple:  Take the number of months you have worked prior to July 1, 2011, and divided it by the total number of months you have worked at retirement, then multiply it by the 3% COLA.  Remember, entering the DROP is the same as retiring, so the calculation would be to the time you enter DROP.

For instance,  if you have 24 years of service as of July 1, 2011 (now!), and you continue to work until you have 30 years in, your COLA calculation is 24/30 = 80%,  80% of the 3% Cola is 2.4% COLA for your retirement.

If you have 21 years of service as of July 1, 2011 (now!), and you continue to work until you have 25 years in, your COLA calculation is 21/25 = 84%,  84% of the 3% Cola is 2.52% COLA for your retirement.

If you have 27 years of service as of July 1, 2011 (now!), and you enter the DROP when you have 30 years in, your COLA calculation is 27/30 = 90%,  90% of the 3% Cola is 2.7% COLA through your DROP period, and the for the rest of your retirement.

You can see that the more years you have it NOW, the higher your percentage of COLA will be, either in the DROP or in Retirement.  The current legislation stipulates that the COLA will return at 3% on July 1, 2016, so the maximum loss will be 5 years of credit.  Let’s assume you have 20 years in now, and you DROP or retire at 30 years.  You will get 20 years of credit up until July 1, 2011, then you will get NO credit for the next 5 years, and then you will get 5 years of additional credit for the time you work from July 1, 2016 until you DROP or retire with 30 years.  The calculation is basically the same.  You have 25 years of 3% COLA credit, and 5 years with no credit.  Your COLA would be 25/30 times 3% = 2.5%.

It is important to note that pushing your retirement ahead in order to “lock in” 3% COLA will probably NOT prove to be your best option.  By “locking” it in, you will forego any additional salary (at 100% of your earnings), as well as the future years service credit for years worked.  It might provide you with a higher COLA percentage, but it will be on a smaller pension benefit.  For Instance:

You have 24 years in Special Risk with an AFC of $50,000.  You want to retire now, so that you will lock in 3% COLA for life.  Your pension will be 24 years times 3% service credit = 72% of your $50,000 AFC = for a pension benefit of $36,000 per year.  Because you elected to retire early, your benefit will be reduced by 5% as a penalty for early retirement (the penalty is 5/12 or .0042 per month or 5% per year you retire before your “normal retirement age”), so your first year benefit will be $34,200. Your second year pension will increase by a 3% COLA, or $1,026, for a 2nd year benefit of $35,226.

Had you worked that one more year to get you to the 25 year “normal age of retirement”, the scenario is this.  Your first year benefit is 25 years of service, times 3% service credit per year = 75% of your AFC = $37,500 benefit for the first year.  The 2nd year your benefit goes up by the calculated COLA (24/25 times 3%) of 2.88%, or $1080!  Your 2nd year benefit is $38,580.  By “locking in” the 3% COLA, you effectively lost over $3000 for just the second year.

Make sure you do the math!  Locking in the COLA by retiring or entering the DROP early will very likely cost you a lot of money.  Obviously, it is not as good of a benefit as it was, but don’t make a foolish mistake that will cost you dearly in the future.  A percentage of 3% is better than NO COLA.

We hope this helps!  We encourage you to discuss your options with a financial advisor who is familiar with FRS and with your personal financial situation.

  • Cam

    Do you have an estimated date when the calculations page on will be back up? The page under second choice options which showed you how much funds you have if you were to switch to the investment plan. 

  • Wenz

    With all this being the same except my 3% contribution I should not see any reduced retirement estimates on my pension is this correct? I mean there should be no changes in estimates prior and aft the bill if I’m putting in the 3% difference…

  • FRS Options

    The employer contribution is subject to change each year based on the actuarial funding analysis. If the plan is underfunded, the contribution can go up, and vise versa. I suspect with the changes, the contribution will go down in the near future.

  • FRS Options

    Unfortunately, we have no idea. Whenever FRS gets the new programming complete it will go back up.

  • FRS Options

    You pension is a “defined benefit plan”, meaning the benefit is defined as percentage of your AFC. Unless the AFC changes, the benefit will not, regardless of changes in contributions.

  • Mosers

    I am 51 and have been teaching 23 years.  I would like to retire in Oct. 2022 when I am 62 or possibly July 1,2022.
    Would it benifit me to buy one of my years from out of state for $18,000 from my 403b acct. to get that extra year of COLA.
    Please don’t say work another year.  That would be 38 years of teaching. 

  • FRS Options

    I won’t tell you to work another year. If you work until October 2022, that is 34 years and qualifies you for the 1.68% for all of your years of service. The buy-in is simple math. FRS can tell you what it will cost, and what it will do to your benefit, then you can easily figure out if it is worth it. You might discuss with the FRS people the possibility of moving the money from your 403b on a tax deferred basis, as they are both qualified money, otherwise you will have to pay taxes and probably a penalty to take the money out of the 403b for the buy-in. How ever you decide, it is whether you can afford to retire at that age on that pension which will be the real choice.

  • Mosers

    I do not understand what ” 1.68  for all your years of service” means.
    I think I can live off the pension due to the fact I have no mortgage as of recently and can save about  $20, 000 a year now.

  • FRS Options

    You get 1.6% of your AFC for each year of service up to 30 years, after 31 it goes up to 1.63%, 32 years it goes to 1.65%, and 1.68% per year after 33 years. That means if you have over 33 years of service, you will get 1.68% per year of service times your your AFC as your pension.

  • Retired LEO

    Will the legislature have an appetite to come back next year like Tricky Ricky Scott wants to do and revisit taking away more retirement benefits during an election year? 

    That is the big question, if we can change the face of the legislature we can all but end Rick Scotts theft of our benefits. 

  • FRS Options

    You are right, that is the real question. My guess is he will try, but whether the legislature will concede to his desires is yet to be seen.

  • gatorteach

    I reach thirty years Dec 2011.  If I apply for DROP before July 1st, would I get the 6% or the 1.3%  I am sure it is the 1.3, but MAYBE…….there is a loophole?

  • FRS Options

    Don’t know of any loopholes, unless you are 62. The lower rate is sad, but it is not the end-all. It will reduce your DROP amount by about 12 or 13%. It will still be a nice little sum of money, even at the lower rate.

  • N White35

    It’s gonna get ya one way or another.  I am newly retired (2010) and thankful that my benefits were not reduced.  But, the Palm Beach County School District has just increased my monthly medical insurance bill by $85 .  That’s $1,020 additional a year.  OUCH!.

  • Gregg

    I’m not sure I follow what you are implying. If my wife enters DROP this month (she has 30 years of service in the school system) before the July 1 change date, there is a chance that the DROP program could be eliminated and she would be out in the cold with only my monthly pension and one year of DROP money – and no job?

  • M Cooper

    I could enter DROP and secure the 3 percent COLA on July 1. I am considering waiting 6 months to increase my AFC. If I retire in the middle of the year will the COLA be calculated with credit for the extra six months or would I lose an entire year of COLA for working past July 1? It looks like it would be the difference between 2.88 percent or 2.94 percent. I want to run all the numbers before I decide.  Thank you.

  • FRS Options

    If she is in the DROP, I would think she would be fine, the courts don’t look kindly to stripping benefits away from those already collecting.

  • FRS Options

    You are eligible for 60 months of DROP beginning on your eligibility date, and not the date you enroll. If you wait 6 months past your eligibility date you might sacrifice 6 months within the DROP, so check you dates as well as doing the math.

    You won’t lose a year of DROP, it is calculated by the month.

  • Turk225

    I have a question, I will have 25 years in high risk August 28. Can I enter the drop June 30? And if so will I lose a full 5% or is it pro-rated to where I lose a percent of that 5%?

  • FRS Options

    You may be able to enter in early August, but I don’t believe you will be
    able to get in by June 30 to qualify for the 6.5%. You will most likely
    only get the 1.3%.

  • Jbaker

    I am confused on the %  amount the State is going to contribute starting 7/1/11 in the Investment Plan

  • FRS Options

    Here is the link. It depends on which class you are in. They are subject to change every year, depending on the actuarial requirements for the funding levels. It appears the legislative changes, and current soundness of the system allowed the contribution levels to be lowered this year.

  • lifelong teacher

    My greatest concern moving foward are in changes to Remployment rules for FRS pension member.   Where it stands right now – if I retire, after a year I could work part time as a substitute teacher, or as an adjunct for a community college.  I understand that there where two bills that “died” in the last session that would have prevented me from EVER working for a public school or college.  I am going to need to keep watch for this.  If it passes I will have NO choice but to retire before the new rules kick in – even if it means I get less for my pension.  I could not leave teaching forever.  That would not be acceptable.

  • FRS Options

    It is a tricky area. The Government does not want people to tap into their tax deferred retirement plans, and then also go back to work and accumulate another benefit. I suspect their motive is to force those who don’t really want to retire, to NOT retire. As it stands, it appears you may go back to work and simply not participate in FRS again, but we have had conversations with teachers who indicate their employer will not rehire them if they are not eligible for FRS. We would urge you to do your due diligence, and maybe only retire if you are truly ready to retire and not teach anymore.

  • FRS Options

    A few things.

    Unless you have a special exemption (some teaching jobs) you can only defer DROP until the age 57.

    The idea of the legislature eliminating COLA is to cut costs, and therefore it will reduce your benefit. While the PERCENTAGE OF COLA continues to go down the longer your work, the DOLLAR VALUE DOES NOT. If you do the math, you will find that the additional years of service credit increase the pension such that you will not get a lower amount of money, but rather a smaller percentage of a larger pension, which will be higher in dollar terms than you might think.

    We believe you should do the math and see where the numbers work out. To retire early (or enter the DROP) simply because the COLA is lower seems to overlook the real benefit of a larger pension for each year of service. Your pension payments will not go down, they will simply not go up as much.

    The limit to the denominator is the total years you work. The numerator is the years you have worked prior to July 1 of this year. The numerator can not be larger than the denominator. If you have 30 years in now, and continue to work for 3 years (I’m assuming you DROP at age 57) and then enter the DROP for 5 years, you would have 30 years at 3% (the numerator), and 33 years total (the denominator), for a COLA of .91% of 3%, which gives you a COLA of 2.73%. The denonominator caps when you enter DROP, as that is when you retire as far as FRS in concerned.

    We urge you to not retire early thinking the reduction in COLA is a sufficient reason. Your pension goes up for each year you work, and while over time the COLA is important, it is not so important as retiring with a larger pension, nor a larger COLA.

  • Sweetbabe

    I’m curious to find out where will the future funds collected from employees contribution go? Will it be accounted for? Is there a special account? I’ll be watching like a hawk. Is this for Rick Scott personal gain

  • FRS Options

    All funds collected from employers and employees alike go directly to FRS. If you are in the pension plan, they go to the pension plan. If you are in the Investment Plan, they go to your individual account. None goes to the Governor.

  • Seeking clarity

    I’m aware that retiring sooner to get more COLA is a losing proposition.  As you say, the extra retirement pay you earn by working longer would eclipse the lesser COLA.  But that’s not the issue.  My supervisor is adamant that the reduction in COLA only applies to those with less than 30 years service as of July 1, 2011, and that if you already have 30 years as of July 1, then you get 3% regardless of how much longer you work because the denominator cannot be more than 30, so you “lock in” the 3% rate at 30 years service.  The reduction was targeted for those not already eligible for retirement (just as most of the other changes apply only to future employees, not existing employees), and is not intended to penalize those who work past retirement eligibility.  He says the misunderstanding is due to the information sheets being published that were designed to address employees who currently have less than 30 years’ retirement credit, and fail to consider those who already have 30 years  (they assume that anyone with 30 years would already be retiring).  Are you absolutely certain he’s wrong?  Thanks.

  • Seeking clarity

    Even if what you fear is true, you could always retire from pulbic service and then continue teaching for a non-FRS employer, i.e, a private school.  They are not affected by these laws.

  • FRS Options

    Here is the final legislation from the Senate Website, read it and make a determination. I see absolutely nothing that indicates those with 30 years in prior to July 1 will get a full 3%. Rather, what I read indicates the calculation is for all members who retire after July 1.

    (4) For members whose effective retirement date is on or after July 1,
    2011, the benefit of each retiree and annuitant shall be adjusted annually on
    July 1 as follows:
    (a) For those retirees and annuitants who have never received a cost-ofliving
    adjustment under this subsection, the amount of the monthly benefit
    payable for the 12-month period commencing on the adjustment date shall be
    the amount of the member’s initial benefit plus an amount equal to a
    Ch. 2011-68 LAWS OF FLORIDA Ch. 2011-68
    CODING: Words stricken are deletions; words underlined are additions.
    percentage of the member’s initial benefit. This percentage is derived by
    dividing the number of months the member has received an initial benefit by
    12, and multiplying the result by the factor calculated pursuant to paragraph
    (b) For those retirees and annuitants who have received a cost-of-living
    adjustment under this subsection, the adjusted monthly benefit shall be the
    amount of the monthly benefit being received on June 30 immediately
    preceding the adjustment date plus an amount determined by multiplying
    the benefit by the factor calculated pursuant to paragraph (c).
    (c) The department shall calculate a cost-of-living factor for each retiree
    and beneficiary retiring on or after July 1, 2011. This factor shall equal the
    product of 3 percent multiplied by the quotient of the sum of the member’s
    service credit earned for service before July 1, 2011, divided by the sum of the
    member’s total service credit earned.
    (5) Subject to the availability of funding and the Legislature enacting
    sufficient employer contributions specifically for the purpose of funding the
    expiration of the cost-of-living adjustment specified in subsection (4), in
    accordance with s. 14, Art. X of the State Constitution, the cost-of-living
    adjustment formula provided for in subsection (4) shall expire effective June
    30, 2016, and the benefit of each retiree and annuitant shall be adjusted on
    each July 1 thereafter, as provided in subsection (3).

    If you find that he is correct, please let us know, and show us where you found it, so that we may correct our posts.

  • Seeking clarity

    I read it the same way you do, even though it seems illogical to pay someone less for more years of service.  He may be right that it was not intended that way, but by the actual wording, that certainly seems to be the way it is.  Unless there are some procedural rules to the contrary, I’ll have to assume you and I are correct and he is mistaken.  I’m going to check with someone at FRS for a definitive ruling, and will let you know how they respond.  Thanks!

  • JMM

    I’m planning on entering DROP with 30 years Regular class service and plan on working  the full five years in DROP.  What are some basic considerations for selecting an FRS  payout option?  My spouse will have a 30 year FRS pension in of her own plus additonal retirement assets between us.

  • FRS Options

    It would really depend on your total financial picture. If you want to cover your spouse in the event something happens to you, you will have to pay for it. The other alternative is Option 1, and providing a benefit for your spouse with something outside of FRS. It is something I would suggest you speak with a financial advisor you trust about, as their are a lot of pieces to that puzzle.

  • DHR

    Of course, the COLA for people who retire after August 2011 will be the total years of service before July 2011 divided by the total years of service at retirement.

    So, a person who started working in June 2010 and who joined the FRS pension plan at that time, will, after working for 30 years, have their COLA  calculated as:

    (1/30) * 3%  

    That comes out to a whopping cost of living adjustment in the year 2040, of  0.1% each year. 
    THAT’S ONE TENTH OF ONE PERCENT that a person’s pension will be increased, after retirement.  

    Now that pensions have been brought “into line with other industries”, when will the state legislature be voting on the bill to bring salaries “into line with other industries”?

  • Pusod1960

    Next December, my FRS account lump sum account will be around $675,000. If I use my 2nd election to transfer it to the Investment plan after getting my 30 years, but before retiring, can I then roll it into my State of Florida Deferred Comp. 457b account, and then take monthly draws on the money without being subject to the 10% penalty? I will only be 52 years old then.

  • lifelong teacher

    I am agonizing over this, and will continue to do my “due diligence”.  The answer may be for met to enter drop, so that I am “retired”, and continue teaching.  If I do this – would I be under new rules they may enact limiting the ability of a teacher to work part time after retiring?  (I know I could teach for a private school – but since I never have done this, I don’t know that any private school would hire me.  I assume they like people with experience in private schools, my heart has always been in the public school).

  • FRS Options

    You may be able to roll it into your 457, but I am not sure if the rollover money will be exempt from the 10% penalty. You might want to check with the Deferred Comp provider as to the plan rules and such. Either way, 52 is pretty young to retire so I hope you have adequate savings and investments.

  • FRS Options

    If you want to continue working and teaching, you should really determine why you would want to retire and take the re-hire risk. If it is simply to get into DROP, you might do some more due diligence and see at what point your pension accrual for each year would offset the lack of DROP if you were to simply keep working.

  • Seymourpansick

    It’s remarkable that the FRS is telling people that the COLA will return in 2016.  That’s a blatant lie. I’ll give you 100 to 1 odds that does not happen. Period.  

    More importantly anyone being hired after this July receives no COLA after retiring. That ought to attract a lot of people to the profession. 

  • FRS Options

    You might be a little easier on FRS, they are only reporting what the legislators have indicated. FRS does not make the decisions, they simply manage within the framework the legislators give them. Technically, they are not saying it will come back, they are saying it could come back. The economy will have to do a serious rebound by then for that to happen. That time will tell how the quality of the employment goes also.

  • Biagio


    FYI, there was a class action lawsuit filed in Leon County re pension changes to current FRS members being unconstitutional. In addition, an injunction is being sought to stop changes until litigation is over. According to some credible sources the current FRS employees have a “very strong case”.

    Let the games begin.

  • Pusod1960

    I will semi-retire, as I wouldn’t have to make as much money with everything paid off. I will use about $ to pay everything off, and even after paying around $30,000 in taxes, I would still be able to annuitize over $500,000. I would also only have 10 years before SS kicked in, about 1200.00 a month.

  • FRS Options

    I saw that. Let’s hope someone besides the attorneys benefit from it!

  • FRS Options

    Just a thought. Give some thought to maybe not paying everything off. I have to think the interest rate you are paying is far less than the 30k in taxes.

  • Ricky

    ??? With The teachers suing the state for making contributions to the FRS, what are the chances that anything gets done on that front, as far as being overturned? Or blocked?

  • FRS Options

    We would not want to venture a guess. Even if something is done, it would seem that it could take a considerable amount of time. One would surmise the legislators recieved a qualified legal opinion on the changes, but who knows.

  • Biagio


    I mentioned to you several weeks ago about using Gov Scott and the legislators words  against them if this came to a lawsuit. Looks like it is coming to fruition.  I hope Scott’s attry’s use the argument that it’s unfair to the private sector that public servants get decent benefits and they have to bring those benefits more in line with the private sector. We will win that argument all day long in regards to what Fl statute and the Constitution have to say about the FRS.

    I believe all the propaganda about the pension being “a ticking time bomb” to “we need to bring public sector benefits more in line with private sector benefits “in the name of fairness” is going to come back and bite Scott. The legislators and Scott have been tripping over their feet trying to explain the reason for stripping benefits to current members. It’s a different reason depending on what time of day it is or who you talk to.

    As far as Scott consulting with his atty’s who feel their on solid ground, so have numerous law enforcement agencies who fired or gave extreme discipline to employees only to have egg on their face when they have to re-hire and give back all accrued benefits.

    If he was smart he should have made whatever changes he wanted for new hires on or after July 1. He could have imposed what he wanted without any or very little opposition.  If you look at the pension reform going on across the country most, if not all, are focused on new hires. Many states and cities have tiered pension systems. I could be wrong but I think we will win this in court.

  • Math4u

    We’ll just have to wait and see what happens.  Meanwhile, our representatives might want to think about the NEXT election.  We may be a right-to-work state but we also carry the right to VOTE……and we’ll vote his supporters out!

  • MBR37

    I am 53 years old with 31 years of FRS service. I had planned to work until I was 57 and then enter DROP which would bring me closer to receiving Social Security benefits and eventually Medicare when I leave my job. The changes in the FRS has me rethinking that plan. I am now considering entering DROP by June 30 to avoid all of the changes taking place on July 1. The changes to FRS is the sole reason I would consider enter DROP at this time. Is it worth it to lock in my benefits now and then have to find another job in 5 years or keep working and take the reduced benefits with the possibility of further changes to FRS being made in the future?
    Just have to sound off … and say that after 31 years of service as a teacher, I find it so unfair that they can change the rules at this point in my life. It seems to me that the changes should have affected new hires and not affected employees who have spent a lifetime in public service only to have the rug pulled out from under them just before retiring. 

  • FRS Options

    I would give serious thought to retiring to avoid the changes. If you have enough service to enter DROP, your benefits will not go down, so much as they will not grow as fast. It doesn’t seem like a good idea to give up a good job, and take the risk of finding another, as it will most likely not pay as well, nor have the same benefits. Do your homework.