Updated October 30, 2026. Quick answer: CalSTRS pays a 2% simple annual benefit adjustment each September 1 after the first anniversary of retirement, not tied to inflation. The Legislature cannot reduce it for members who retired on or after January 1, 2014; for members who retired before that date CalSTRS says it is not contractually guaranteed, though the Legislature has never reduced it. A second layer, the Supplemental Benefit Maintenance Account (SBMA), pays supplements that, at the currently set 85% protection level and subject to available funds, keep a benefit at 85% of its original purchasing power.
More on public pension retirement ages and eligibility: the CalSTRS retirement age and eligibility rules for 2% at 62 members.
The 2% annual adjustment
CalSTRS says: “you’ll receive an automatic benefit increase equal to 2% of your initial benefit beginning September 1 after the first anniversary of your retirement.” “Adjustments are not compounded or tied to changes in the cost of living.” “Under the CalSTRS Funding Plan , the Legislature cannot reduce the 2% annual benefit adjustment for members who retire on or after January 1, 2014.”
The SBMA supplement
CalSTRS describes the second layer: “The purchasing power protection level is currently set at 85% of your initial benefit (base allowance).” “Supplemental payments are not guaranteed and will continue only as long as funds are available.”
The Teachers’ Retirement Board’s November 2025 report says: “As required by law, CalSTRS measures inflation each fiscal year by comparing the California CPI for the month of June across successive years.” The same report says: “CalSTRS paid SBMA benefits to over 184,000 CalSTRS retirees and beneficiaries on October 1, 2025.”
Where 2027 stands
No vote sets the CalSTRS 2% adjustment, and the SBMA amounts for fiscal year 2026 to 2027 are not in the documents read; this page updates when CalSTRS reports them.
A worked example
As a computed illustration (not a source figure), a retiree with an initial monthly benefit of $2,000 (invented, for the computation) gets 2% of the initial benefit, $40 (computed) a month, at each September 1 adjustment. Because the adjustments are not compounded, after three of them the monthly benefit is $2,120 (computed) before any SBMA payment.
What this page does not cover
The Cash Balance Benefit Program is not covered. The statute text was not read for this page, so the rules above rest on CalSTRS’s own pages.
Common mistakes
- Expecting the adjustment to follow inflation. The 2% is a set percentage, not an inflation rate.
- Assuming the 2% compounds. CalSTRS says adjustments are not compounded.
- Counting SBMA payments as guaranteed. CalSTRS says supplemental payments continue only as long as funds are available.
Related: CalSTRS retirement decisions, how public pension decisions work, and whether California taxes pensions.
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Answer againSources
- CalSTRS, Inflation protection: www.calstrs.com
- CalSTRS Teachers’ Retirement Board, Regular meeting Item 7, CEO Report (Inflation and SBMA Update): www.calstrs.com
- Related official page (not quoted): California Legislative Analyst’s Office: lao.ca.gov
- Related official page (not quoted): California Department of Finance: www.dof.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.