Updated October 30, 2026. Quick answer: MERS of Michigan has no system-wide COLA rate for 2027. A COLA is an annual increase that may be applied to your base pension each January, and whether you have one, and how much, is set by your own employer’s division. See your employer for the terms. Because no system-wide 2027 figure exists, none is set yet.
How a MERS COLA works
The MERS Defined Benefit Plan handbook says: “A cost-of-living adjustment (COLA) is an annual increase that may be applied to your base pension amount each January.” “The COLA can either be an automatic increase that is a part of your retirement benefit package, or something that is annually adopted by your employer.”
It points members to the employer: “See your employer for specifics if your retirement benefit includes a cost of living adjustment.”
What employers can adopt
The summary of plan provisions in the appendix to the 2024 annual actuarial valuation says: “Employers may adopt post-retirement cost-of-living adjustments (COLA): One-time COLA for present retirees and beneficiaries”. For an annual COLA, it says it “Provides automatic annual benefit increases.” “The amount of the annual increase may be: (i) A percentage of the original (base) retirement benefit (non-compounded COLA); or (ii) A percentage of the present retirement benefit (compounded COLA); or (iii) A fixed dollar amount.”
In plain terms, the same percentage can mean different dollars depending on the division: a non-compounded COLA is figured on the original benefit, a compounded one on the present benefit, and a fixed dollar amount ignores the benefit size. Check which kind your division adopted before estimating a raise.
Who is left out
A retiree whose division has not adopted a COLA has none, and an adopted annual COLA may reach only some retirees: the same summary says it may apply to either retirees retired before the COLA’s effective date or retirees retired on or after it. The handbook words it as applying only “if your retirement benefit includes a cost of living adjustment”. This page covers the Defined Benefit plan; the Defined Contribution plan is not covered, and the Hybrid plan was not separately reviewed.
Where 2027 stands
There is no system-wide 2027 MERS COLA to set: any increase follows each municipal division’s own terms, and this page updates only if MERS publishes a system-wide rate.
MERS pays the base pension amount that was calculated under the payment option you selected at retirement, and the COLA is applied to that base amount where one applies. The handbook shows examples of the forms a COLA can take, as three separate column headings: “Automatic, Non-Compounding 2.5%”, “Automatic, Compounding 2.5%”. and “Annually Adopted, Compounding 2%”. These are illustrations, not a system-wide rate, and a division’s actual term may be different. One gap to know about: the terms for each division are not published in the sources read, so this page cannot give your rate.
Common mistakes
- Looking for one MERS COLA rate. The handbook examples of 2.5% and 2% are illustrations, not a system-wide rate.
- Assuming you have a COLA. It exists only if your retirement benefit includes one under your employer’s adopted terms.
- Assuming the increase is automatic every January. The handbook says it can be automatic or annually adopted by your employer.
Related: Michigan MERS retirement decisions, how public pension decisions work, and whether Michigan taxes pensions.
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Answer againSources
- Municipal Employees’ Retirement System of Michigan, MERS Defined Benefit Plan Member Handbook: assets.mersofmich.com
- Municipal Employees’ Retirement System of Michigan, Appendix to the 2024 Annual Actuarial Valuation, Summary of Plan Provisions: www.mersofmich.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.