Updated October 30, 2026. Quick answer: Michigan State Police Retirement System retirants and beneficiaries get a fixed 2% increase each October 1, not to exceed $500.00 a year, so the 2027 rule is set. The first increase is on the first October 1 at least 12 months after the retirement allowance begins. The increase does not compound but it does accumulate. Pension Plus members who became members on or after June 10, 2012 receive none.
How the State Police increase works
Section 40a of the State Police Retirement Act says: “The retirement allowance of a retirant or retirement allowance beneficiary shall be increased each October 1, beginning with the later of October 1, 1995 or the first October 1 that is at least 12 months after the retirement allowance effective date.”
On the amount, the Act says: “The amount of the annual increase under this section shall be 2% of the retirement allowance that would be payable without application of this section. The annual increase under this section shall not exceed $500.00.” The Office of Retirement Services (ORS) adds: “The 2% increase does not compound, but it does accumulate.”
Who is covered and who is left out
The fiscal year 2025 annual report says: “All members retiring (or leaving employment with vested benefits), and their survivors, are eligible for automatic 2% annual (non-compounded) benefit increases, with a maximum annual increase of $500.” It then states an exception: “A Pension Plus member who became a member of the System on or after June 10, 2012, does not receive an annual post-retirement increase.”
This page covers the legacy plan under the State Police Retirement Act. One gap to know about: the ORS page says the first increase comes “beginning with the second October after your retirement effective date”, while the Act says the first October 1 at least 12 months after the effective date. The sources do not reconcile the two, so this page follows the Act’s text.
The latest increase and where 2027 stands
The 2027 Michigan State Police increase is set by statute at 2% each October 1, capped at $500.00 a year, so no yearly vote or index applies, and this page updates only if the Legislature changes the statute.
One gap to know about: no document read prints the 2026 October increase as a dated event. The 2026 increase is the same fixed rule applied that year, not a separately announced figure.
The annual report also describes a separate payment: “Effective fiscal year 2016, ORS issued a supplemental payment to eligible recipients. This supplemental payment continues to be issued to eligible recipients each fiscal year, subject to an annual budget appropriation.” It is not part of the 2% increase, and the annual report does not state its size or timing. Section 40c of the Act separately describes a supplemental benefit for retirants whose retirement was effective before October 1, 1986: “if the annual retirement allowance payable to a retirant or a retirement allowance beneficiary of a deceased retirant or member is less than $16,000.00 in the preceding fiscal year, the retirement system shall pay the retirant or retirement allowance beneficiary a supplemental benefit in the amount sufficient to produce an annual retirement allowance of $16,000.00 for the current fiscal year”. The annual report does not cite that section, so this page does not say the two are the same payment.
A worked example
As computed illustrations (not source figures), an allowance of $20,000 (invented, for the computation) a year would see a 2% increase of $400 (computed) a year, under the cap. An allowance of $30,000 (invented, for the computation) a year would figure to $600 (computed), but the Act’s $500.00 cap limits the increase to $500.00.
Common mistakes
- Expecting 2% on any size of allowance. The Act caps the annual increase at $500.00.
- Assuming members hired on or after June 10, 2012 are covered. The annual report says a Pension Plus member who became a member on or after June 10, 2012 receives no annual post-retirement increase.
- Counting the supplemental payment as part of the 2%. It is issued subject to an annual budget appropriation, separately from the Act’s increase.
Related: Michigan State Police retirement decisions, how public pension decisions work, and whether Michigan taxes pensions.
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Answer againSources
- Michigan Legislature, MCL Act 182 of 1986 (State Police Retirement Act), section 38.1640a: www.legislature.mi.gov
- Michigan Office of Retirement Services, Post-Retirement Increases: www.michigan.gov
- State of Michigan Office of the Auditor General / ORS, Michigan State Police Retirement System ACFR, Fiscal Year 2025: audgen.michigan.gov
- 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.