Updated October 30, 2026. Quick answer: The Alabama ERS has no automatic retiree COLA: its Tier 1 member handbook says retiree COLAs are made on an ad hoc basis by the State Legislature, and the amount is set by the legislation (local agencies’ retiree COLAs usually need the agency’s governing body to approve). RSA’s August 2019 Advisor says there were 17 COLAs from 1971 to 2006 and that COLAs have not been granted since 2006, the last being a 7% COLA. That Advisor is the latest RSA document read, so it does not show events after August 2019. No 2027 COLA is set.
More on public pension retirement ages and eligibility: the Alabama RSA retirement age and eligibility rules for Tier 2 and ERS Tier 1.
Who grants a COLA
The ERS Tier 1 member handbook says: “Cost-of-Living Adjustments for retirees are made on an ad hoc basis by the State Legislature. The amount of the increase is based upon the provisions of the legislation.” On eligibility it adds: “A member who participated in DROP was not eligible to receive retiree COLAs.” “A member is not eligible to receive a retiree COLA until he or she has withdrawn from service and has been receiving a retirement allowance for one year.”
For local agencies: “Cost-of-Living Adjustments for retirees of local agencies (non-state member agencies) usually require the approval of the governing body of the ERS agency”.
The history
The RSA Advisor of August 2019, by RSA’s chief executive, says: “there have been 17 COLAs from 1971 to 2006. These COLAs are only granted on an ad-hoc basis by the Legislature without any upfront funding.” “COLAs have not been granted since 2006.” It describes the cost: “in 2006 the 7% unfunded COLA added $1.1 BILLION to the RSA’s unfunded liability.”
It also reports: “This has led the Legislature to grant four, one-time retiree bonuses since 2008.”
Where 2027 stands
No 2027 Alabama COLA is set: the Legislature grants state-retiree COLAs by act (local agencies usually need their governing body’s approval), none appears in the RSA documents read, and this page updates if one is enacted.
Common mistakes
- Expecting a regular COLA. The handbook says increases are ad hoc, by the Legislature.
- Treating a one-time retiree bonus as a COLA. The Advisor distinguishes the two.
- Assuming the 2019 Advisor is current. It speaks as of August 2019; check RSA for anything later.
Related: Alabama RSA retirement decisions, how public pension decisions work, and whether Alabama taxes pensions.
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Answer againSources
- Retirement Systems of Alabama, ERS Member Handbook, Tier 1: www.rsa-al.gov
- Retirement Systems of Alabama, The Advisor, August 2019: Retiree COLAs Can Kill A Pension Program (David G. Bronner): www.rsa-al.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.