Updated October 30, 2026. Quick answer: Arizona PSPRS retirees and survivors get a July increase based on the Phoenix-Mesa-Scottsdale consumer price index, up to 2%. For July 2026 the PSPRS notice, which covers Tier 1 and 2 retirees and beneficiaries, gave most of them 2%, in the payment distributed July 31, 2026. The July 2027 increase is not set yet, because it depends on the 2026 calendar year price change.
The rule
The PSPRS retiree page says: “Cost of Living Adjustment (COLA) increase for public safety retirees and survivors is determined based on the Consumer Price Index (CPI) published by the U.S. Bureau of Labor Statistics for the metropolitan Phoenix-Mesa-Scottsdale area ending December 31 of the prior calendar year. Contingent on the CPI, up to 2% may be paid as a COLA.” The annual report states it as “the Cost of Living Adjustment (COLA) increases for public safety retirees and survivors will be determined based on the Consumer Price Index (CPI) for the metropolitan Phoenix-Mesa area for the calendar year prior to each July payout and is capped at 2%.”
Who gets it and who waits
New retirees are prorated: “For retirees in their first year of retirement (retired on/after July 1 of the prior fiscal year), the increase is prorated based on the date of retirement.” Tier 3 members face an added test: “The increase will be payable after 7 years of retirement, or at age 60, whichever comes first, and will be determined based on the funding level of the PSPRS.” The retiree page sets the Tier 3 cap by funding level in a table, so check it against your own tier. Corrections and elected officials plans are separate plans and are not analyzed here.
The 2026 increase
PSPRS announced the July 2026 increase in a notice dated June 10, 2026: “Tier 1 and 2 public safety, corrections, and elected officials plan retirees and surviving beneficiaries will receive cost of living adjustments to their benefit in July.” “For most retirees and beneficiaries, the increase will amount to a 2 percent cost-of-living-adjustment. However, those who retired less than one year ago will receive a prorated increase based on the starting date of their retirement.” The notice also says: “Capped at 2 percent annually, retiree and survivor benefit increases are controlled by ballot propositions 124 and 125.”
Where 2027 stands
The July 2027 increase is not set yet: it depends on the Phoenix-Mesa-Scottsdale consumer price index for calendar year 2026, and this page updates when PSPRS publishes its notice.
Two gaps to know about: the June 2026 notice covers Tier 1 and 2 retirees only, so no Tier 3 figure for 2026 is printed in the sources read, and the Arizona statute text was not among them.
Common mistakes
- Assuming a guaranteed 2%. The retiree page says up to 2% may be paid, contingent on the price index.
- Expecting a full increase in your first year of retirement. First year retirees are prorated by retirement date.
- Assuming Tier 3 members get the same increase at the same time. Tier 3 requires 7 years of retirement or age 60, and the funding level sets the cap.
Related: Arizona PSPRS retirement decisions, how public pension decisions work, and whether Arizona taxes pensions.
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Answer againSources
- PSPRS, Increases (retiree page): www.psprs.com
- PSPRS, Annual Comprehensive Financial Report FY2025: www.psprs.com
- PSPRS, PSPRS Member Handbook: www.psprs.com
- PSPRS, Cost of living adjustment (COLA) for July 1, 2026: www.psprs.com
- Related official page (not quoted): IRS Tax Topic 410, Pensions and annuities: www.irs.gov
- Related official page (not quoted): IRS Tax Topic 411, Pensions: the General Rule and the Simplified Method: www.irs.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.