Cost-of-Living Adjustment (COLA) for Retired Municipal Police Officers and Firefighters
Summary:
Act 21 of 2026 was signed into law by Governor Shapiro. This directs PMRS to provide a Cost-of-Living Adjustment (COLA) for Retired Municipal Police Officers and Firefighters. PMRS will administer the COLA adjustments for our participating municipalities whose police and firefighters are enrolled in our system.
According to the law, eligible retirees must:
- Have retired from active municipal employment as a police officer or firefighter,
- Be receiving a retirement benefit based on that service,
- Have begun receiving benefits before January 1, 2021, and
- Be in pay status as of August 1, 2026.
This adjustment is applied per retiree – not per plan. If a retiree receives benefits from more than one municipal plan, each plan must prorate the award so the retiree does not exceed the total amount allowed. Survivor annuitants are not entitled to the COLA.
Who is included?
Exception: If the retiree has submitted a request to opt out of receiving a COLA
PMRS retired municipal police officers and firefighters who began receiving benefits on or before December 31, 2020.
How much is the increase?
COLA increases monthly benefit – per retired member
- $75: Member has been retired 5 to 10 years as of 1/1/2026 (1/1/2016 – 12/31/2020)
- $150: Member has been retired 10 to 20 years as of 1/1/2026 (1/1/2006 – 12/31/2015)
- $300: Member has been retired 20+ years as of 1/1/2026 (on or before 12/31/2005)
Note: There is a 65% reduction on COLA eligible members who already received post-retirement increases
How is my COLA calculated?
PMRS will:
- Calculate the Special Ad Hoc COLA using the gross pension benefit, less 65% reduction of previous COLAs awarded between 12/31/2001 and 1/26/2026
- Credit the COLA to the Cash Balance benefit line, ensuring it does not affect maximum COLA limits prescribed by the plan’s adoption agreement
- Apply the COLA similar to Excess Interest awards
When will I see the COLA increase in my retirement payment?
- Payments will be made as soon as administratively feasible, retroactive to August 1, 2026.
What will future adjustments look like?
Each year, the amount of the Special Ad Hoc COLA must be reduced by 65% of the total amount of prior COLAs awarded between 12/31/2001 and 1/1/2026 and paid in the immediately preceding year.
PMRS is prioritizing this project statewide. We are committed to issuing all payments, including retroactive amounts, by the end of 2026.
PMRS will provide more information as it becomes available through email and mail communications to municipalities and our retired police and firefighter members.
If you have any questions regarding the COLA increase, please contact our Client Relations department.
Municipalities
The information below is for PMRS Municipalities. If you are a municipality, please contact a Client Relations Municipal Specialist.
Municipal Cost & Reimbursement
This special Ad Hoc COLA is being funded by the commonwealth as a restricted account within the Municipal Pension Fund. Money in the accounts is appropriated to the Department of Auditor General on a continuing basis to reimburse municipalities.
Municipalities WILL NOT bear the cost of the Special Ad Hoc COLA.
Act 21 requires:
- Municipalities must certify their annual amortization cost of the COLA to the Auditor General no later than April 1 each year.
- The Auditor General will reimburse municipalities for the added expense.
- Reimbursements and certifications must follow the format required by the Auditor General.
An adjustment reimbursable under Act 21 may not be used to calculate or allocate aid under the Municipal Pension Plan Funding Standard and Recovery Act.
Cash Flow Shortage Provision
If a municipality experiences a cash flow shortage directly related to this COLA or its reimbursement method, the Auditor General may use the Municipal Pension Aid Fund to temporarily assist, subject to reconciliation.
Next Steps for Municipalities
PMRS considers this a two-phase project.
Phase 1 – Benefit Adjustment
PMRS will:
- Verify eligibility
- Calculate benefits
- Process payments
- Communicate to eligible retirees
Phase 2 – Municipal Accounting
PMRS will provide:
- Employer‑specific cost summaries,
- Reimbursement guidance,
- Instructions for annual certification to the Auditor General.
