Updated October 30, 2026. Quick answer: The Arizona State Retirement System has no automatic cost-of-living adjustment. A permanent benefit increase (PBI) under A.R.S. 38-767 takes effect July 1 and is paid only from excess investment earnings, meaning earnings above an 8% yield (unused excess earnings carry forward to later years), with the percentage increase capped at 4% in aggregate for all eligible persons. A further increase based on years since retirement is paid to eligible retirees with more than ten years of credited service. Members hired on or after September 13, 2013 are not eligible. No 2027 increase is set.
More on public pension retirement ages and eligibility: the Arizona ASRS retirement age and eligibility rules.
How the ASRS benefit increase works
Arizona Revised Statutes section 38-767 says: “The excess investment earnings on accounts associated with those persons eligible for an annual benefit increase pursuant to subsection A of this section are zero if the yield rate on ASRS assets is less than or equal to eight per cent.” “If the quotient is less than one, no benefit increases shall be granted.” “The total amount of the percentage increase provided in subsection A of this section shall not exceed four per cent in aggregate for all persons eligible for an increase.” “The benefit increase shall commence on July 1.”
The statute adds that excess earnings not used for benefit adjustments in a year are available for increases in following years, and it provides a further benefit increase based on the number of years since retirement for a retired member with more than ten years of credited service.
Who is eligible
ASRS’s actuarial valuation as of June 30, 2022 describes it: “Retirees who have been retired one year are eligible for a PBI up to a maximum of a 4% increase.” It also states: “Due to legislation enacted in the 2013 legislative session, PBIs and EPBIs will not be awarded to members hired on or after September 13, 2013.”
Where 2027 stands
No 2027 ASRS permanent benefit increase is set: the statute ties any increase to investment earnings above 8%, including unused earnings carried forward, ASRS’s own notice pages could not be read for this page, and this page updates when ASRS publishes one. Whether any increase took effect on July 1 of 2024, 2025 or 2026 is not shown in the documents read, so check ASRS for any increase since 2022.
What this page does not cover
This page covers ASRS retirees and beneficiaries whose membership began before September 13, 2013. The Public Safety Personnel Retirement System, the Elected Officials’ Retirement Plan and the Corrections Officer Retirement Plan have their own rules.
Common mistakes
- Expecting an annual COLA. The statute grants an increase only when earnings exceed the threshold, and none is granted if the quotient is below one.
- Assuming members hired on or after September 13, 2013 can receive a permanent benefit increase.
- Treating the 4% as a guaranteed raise. It caps the percentage increase that can be granted, and none is granted if earnings are insufficient.
Related: Arizona ASRS retirement decisions, how public pension decisions work, and whether Arizona taxes pensions.
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Answer againSources
- Arizona Legislature, A.R.S. 38-767 Benefit increases; applicability: www.azleg.gov
- Arizona State Retirement System / GRS (mirror host publicplansdata.org), Arizona State Retirement System Annual Actuarial Valuation, Funding, as of June 30, 2022 (ASRS report by Gabriel, Roeder, Smith & Company, hosted by Public Plans Data): publicplansdata.org
- Related official page (not quoted): Arizona Revised Statutes, Title 38: www.azleg.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.