Updated October 30, 2026. Quick answer: The Virginia Retirement System COLA took effect on July 1 of 2026 at 2.63% for Plan 1 and 2.32% for Plan 2 and the Hybrid Retirement Plan, included in the August 1 payment. The Code of Virginia caps the COLA at 5% for Plan 1 and 3% for Plan 2 and Hybrid, and it is 0% in years of no inflation or deflation. The 2027 COLA is not set yet: it comes from the 2026 calendar-year average CPI-U.
More on public pension retirement ages and eligibility: the Virginia VRS retirement age and eligibility rules for the Hybrid plan and Plan 2.
Estimate a Virginia Retirement System Plan 1 pension from service, age and average final compensation: Virginia VRS Plan 1 retirement calculator.
How the VRS COLA is set
VRS says: “The Code of Virginia caps the annual COLA at a 3% maximum for Plan 2 and Hybrid Retirement Plan members, or a 5% maximum for Plan 1 members. During years of no inflation or deflation, the COLA will be 0%.” For Plan 1 members hired before July 1, 2010 with at least 60 months of creditable service as of January 1, 2013, the Code of Virginia section 51.1-166 reads: “for anyone who (a) is not a person who becomes a member on or after July 1, 2010, and (b) has at least 60 months of creditable service as of January 1, 2013, the applicable annual increase, if any, in the CPI-U shall be considered only to the extent of the first three percent plus one-half of the next four percent of any additional increase, or a maximum increase in the post-retirement supplement of five percent in any given year.”
For Plan 2 and the Hybrid Retirement Plan, it reads: “annual increase, if any, in the CPI-U shall be considered only to the extent of the first two percent plus one-half of the next two percent of any additional increase, or a maximum increase in the post-retirement supplement of three percent in any given year.”
Timing and who qualifies
VRS says: “The July 1 COLA will be included in the August 1 benefit payment of eligible retirees.” The VRS retiree handbook explains: “VRS reviews the COLA annually and implements any increases the following July 1 at the start of the fiscal year.” On eligibility: “If you retire with an unreduced benefit or with a reduced benefit with at least 20 years of service credit, the COLA will go into effect on July 1 after one full calendar year (January 1 to December 31) from your retirement date.” For a reduced benefit with fewer than 20 years of service the handbook adds: “If you retire with a reduced benefit with fewer than 20 years of service credit, the COLA will go into effect on July 1 after one full calendar year (January 1 to December 31) from the date you would have become eligible for an unreduced benefit.”
The last four COLAs
The VRS COLA page lists these rows:
| COLA year (effective July 1) | Plan 1 (percent) | Plan 2 and Hybrid (percent) |
|---|---|---|
| 2026 | 2.63 | 2.32 |
| 2025 | 2.95 | 2.48 |
| 2024 | 3.56 | 3.0 |
| 2023 | 5.0 | 3.0 |
Where 2027 stands
The 2027 VRS COLA is not set: it is computed from the 2026 calendar-year average CPI-U, so it cannot be known before that year ends, and this page updates when VRS publishes it.
A worked example
As a computed illustration (not a source figure), a Plan 1 retiree with a monthly benefit of $2,000 (invented, for the computation) whose COLA is the 2026 rate of 2.63% would see an increase of $52.60 (computed) a month. A Plan 2 retiree at the 2.32% rate would see $46.40 (computed) a month.
Common mistakes
- Applying the Plan 1 rate to a Plan 2 or Hybrid retiree. The two plans have different formulas and caps.
- Expecting a COLA on the first July 1 after retiring. The handbook ties it to one full calendar year after the retirement date, or after the date the retiree would have been eligible for an unreduced benefit when a reduced benefit rests on fewer than 20 years of service.
- Looking for a 2027 figure before the 2026 calendar-year CPI-U average is published.
Related: Virginia VRS retirement decisions, how public pension decisions work, and whether Virginia taxes pensions.
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Answer againSources
- Virginia Retirement System, Cost-of-Living Adjustment (COLA) | Virginia Retirement System: www.varetire.org
- Virginia General Assembly (LIS), Code of Virginia 51.1-166 Post-retirement supplements generally: law.lis.virginia.gov
- Virginia Retirement System, VRS Retiree Handbook (RETIREE HB 07-2026): www.varetire.org
- Related official page (not quoted): Code of Virginia, Title 51.1, Pensions, Benefits, and Retirement: law.lis.virginia.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.