Updated October 30, 2026. Quick answer: Most CalPERS retirees, 95.9% of them, have a 2% COLA provision. Most of them received a 2% adjustment on the May 1, 2026 check, though the committee tables show other outcomes for some groups, such as those with a purchasing power allowance and recent retirees. The COLA is the lesser of the compounded rate of inflation since retirement and the employer’s contracted COLA percentage. Inflation for 2025 was 2.63%. The May 1, 2027 COLA depends on the 2026 annual CPI and is not set yet.
More on public pension retirement ages and eligibility: the CalPERS retirement age and eligibility rules.
How the CalPERS COLA works
CalPERS says: “COLA is an annual cost-of-living increase that begins the second calendar year after retirement and helps your retirement benefit keep up with the rate of inflation.” “If the rate of inflation since retirement is higher than the employer contracted COLA percentage, by law, we must apply the lesser of the two.” “The actual COLA percentage you receive is the lower of the two compounded amounts.”
The May 2026 COLA
The Pension and Health Benefits Committee item of March 17, 2026 says: “The COLA is limited to the lesser of two numbers, the rate of inflation or the compounded COLA provision contracted by the employer.” “Currently 95.9% of CalPERS retirees have a 2% COLA provision and will receive a 2% adjustment this year.” “The 2.63% inflation rate this year will be used in calculating the 2025 COLAs for CalPERS retirees and will be reflected on the May 1, 2026, retirement checks.”
The purchasing power allowance
When inflation has outrun the contracted COLA, a second benefit can apply. CalPERS describes it: “Benefit designed to maintain the original purchasing power of CalPERS retirees to a predetermined limit when accumulated COLA has not maintained pace with inflation.” “Whether a PPPA adjustment is payable is determined each year after the annual COLA is applied.” The protection levels shown are 75% for State and Schools and 80% for Public Agencies.
Where 2027 stands
The May 1, 2027 CalPERS COLA is not set: it depends on the 2026 annual CPI, and this page updates when CalPERS publishes it.
A worked example
As a computed illustration (not a source figure), a 2% COLA on an allowance of $2,000 (invented, for the computation) is an increase of $40 (computed) a month.
Common mistakes
- Assuming every retiree gets the inflation rate. The COLA is the lesser of inflation and the employer’s contracted percentage.
- Expecting a COLA in the first calendar year after retiring. It begins the second calendar year.
- Confusing the COLA with the purchasing power allowance, which is decided separately each year.
Related: CalPERS retirement decisions, how public pension decisions work, and whether California taxes pensions.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Talk to an advisor about retirement income
For U.S. investors with $250,000 or more in investable assets. WiserAdvisor is an independent service matching you with 2 to 3 vetted advisers. Its form asks for your ZIP code and answers to a few questions; a match is not guaranteed.
Free to request, with no obligation to hire. By submitting, you consent to calls, texts and emails from WiserAdvisor and up to three advisers. Advisers pay for introductions.
Clear Money Guide may earn a referral payment for a qualifying completed form. An introduction is not a Clear Money Guide recommendation.
Opens on WiserAdvisor’s site in a new tab.
Explore advisor help with retirement income
Considering financial advice? Request an adviser introduction with no obligation to hire.
The form is run by Kapitalwise, our advisor-matching partner. Requesting an introduction is free. Submitting the form shares your contact details with advisers, so expect calls and texts. Advisers pay for introductions. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you hire anyone. A match is not guaranteed.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- CalPERS, Cost-of-Living Adjustment (COLA): www.calpers.ca.gov
- CalPERS, Pension & Health Benefits Committee Agenda Item 6d, Retiree Cost-of-Living Adjustment: www.calpers.ca.gov
- CalPERS, Retirement Benefit Services Division, Cost-of-Living Adjustment (COLA) presentation: www.calpers.ca.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.