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IMRF COLA 2027: Tier 1 at 3%, Tier 2 at 1.500% in 2026

Updated October 30, 2026. Quick answer: IMRF Tier 1 pensions rise by 3% of the original pension every January 1, a flat amount that is not compounded; the first increase is prorated by the months retired in the first year. Tier 2 pensions rise by the lower of 3% or one-half of the CPI-U increase, also on the original amount: 1.200% in January 2025 and 1.500% in January 2026. The January 2027 Tier 2 increase is not published yet.

More on public pension retirement ages and eligibility: the Illinois IMRF retirement age and eligibility rules for Tier 1 and Tier 2.

Tier 1: 3% of the original pension

IMRF says: “Your pension is increased by 3% of your original pension amount on January 1 of each year.” “The amount is always 3% of your original pension amount, not 3% of your current pension payment.”

Tier 2: the lower of 3% or half the CPI-U

IMRF’s Authorized Agents manual describes the Tier 2 formula: “The increase, which is not compounded, is the lower of 3% or one-half of the increase in the Consumer Price Index Urban (CPI-U) for the preceding 12 months as of September, of the original amount.” Tier 2 increases begin on the first January after the 67th birthday or after one year of benefit payments, whichever is later. The manual also says no Tier 2 increase is paid if the CPI decreases or is zero.

For Tier 1, IMRF’s manual notes that with the optional pension the 3% increase is also reduced at age 62.

IMRF’s Tier 2 page states: “Your 2026 increase will be 1.500%, and is effective January 1, 2026.” It adds: “The amount of your annual increase is set by the Illinois Pension Code and is not affected by investment performance.”

Where 2027 stands

The January 1, 2027 Tier 2 increase is not published: IMRF lists only the 2025 and 2026 increases, the formula uses CPI-U data through September, and this page updates when IMRF posts it.

A worked example

As computed illustrations (not source figures), a retiree with an original pension of $2,000 (invented, for the computation) a month gets a Tier 1 increase of 3% of that amount, $60 (computed) a month, in each full year of increase. The Tier 2 increase of 1.500% in January 2026 on the same original pension is $30 (computed) a month.

What this page does not cover

This page covers the Regular Plan tiers. The Illinois Pension Code text could not be read for this page, so the rules rest on IMRF’s own pages, and the Tier 1 SLEP, ECO and surviving spouse pages were not read.

Common mistakes

  • Treating the Tier 1 3% as compound. IMRF says it is always 3% of the original amount.
  • Using the Tier 2 percentage for a Tier 1 member, or the reverse.
  • Expecting an increase before age 67 or one year of benefit payments for a Tier 2 member.

Related: Illinois IMRF retirement decisions, how public pension decisions work, and whether Illinois taxes pensions.

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Sources

  • IMRF, Annual Increases for Retirees in the Tier 1 Regular Plan: www.imrf.org
  • IMRF, 5.20 B. 12. Pension Increases After Retirement, IMRF Manual for Authorized Agents 2021: www.imrf.org
  • IMRF, Annual Increases for Retirees in the Tier 2 Regular Plan: www.imrf.org
  • Related official page (not quoted): Illinois Commission on Government Forecasting and Accountability: cgfa.ilga.gov
  • Related official page (not quoted): Illinois General Assembly: www.ilga.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.

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