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CalPERS COLA 2027: the Formula and the May 2026 COLA (2%)

Updated October 30, 2026. Quick answer: Most CalPERS retirees, 95.9% of them, have a 2% COLA provision. Most of them received a 2% adjustment on the May 1, 2026 check, though the committee tables show other outcomes for some groups, such as those with a purchasing power allowance and recent retirees. The COLA is the lesser of the compounded rate of inflation since retirement and the employer’s contracted COLA percentage. Inflation for 2025 was 2.63%. The May 1, 2027 COLA depends on the 2026 annual CPI and is not set yet.

More on public pension retirement ages and eligibility: the CalPERS retirement age and eligibility rules.

How the CalPERS COLA works

CalPERS says: “COLA is an annual cost-of-living increase that begins the second calendar year after retirement and helps your retirement benefit keep up with the rate of inflation.” “If the rate of inflation since retirement is higher than the employer contracted COLA percentage, by law, we must apply the lesser of the two.” “The actual COLA percentage you receive is the lower of the two compounded amounts.”

The May 2026 COLA

The Pension and Health Benefits Committee item of March 17, 2026 says: “The COLA is limited to the lesser of two numbers, the rate of inflation or the compounded COLA provision contracted by the employer.” “Currently 95.9% of CalPERS retirees have a 2% COLA provision and will receive a 2% adjustment this year.” “The 2.63% inflation rate this year will be used in calculating the 2025 COLAs for CalPERS retirees and will be reflected on the May 1, 2026, retirement checks.”

The purchasing power allowance

When inflation has outrun the contracted COLA, a second benefit can apply. CalPERS describes it: “Benefit designed to maintain the original purchasing power of CalPERS retirees to a predetermined limit when accumulated COLA has not maintained pace with inflation.” “Whether a PPPA adjustment is payable is determined each year after the annual COLA is applied.” The protection levels shown are 75% for State and Schools and 80% for Public Agencies.

Where 2027 stands

The May 1, 2027 CalPERS COLA is not set: it depends on the 2026 annual CPI, and this page updates when CalPERS publishes it.

A worked example

As a computed illustration (not a source figure), a 2% COLA on an allowance of $2,000 (invented, for the computation) is an increase of $40 (computed) a month.

Common mistakes

  • Assuming every retiree gets the inflation rate. The COLA is the lesser of inflation and the employer’s contracted percentage.
  • Expecting a COLA in the first calendar year after retiring. It begins the second calendar year.
  • Confusing the COLA with the purchasing power allowance, which is decided separately each year.

Related: CalPERS retirement decisions, how public pension decisions work, and whether California taxes pensions.

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Sources

  • CalPERS, Cost-of-Living Adjustment (COLA): www.calpers.ca.gov
  • CalPERS, Pension & Health Benefits Committee Agenda Item 6d, Retiree Cost-of-Living Adjustment: www.calpers.ca.gov
  • CalPERS, Retirement Benefit Services Division, Cost-of-Living Adjustment (COLA) presentation: www.calpers.ca.gov

Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.

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