Updated October 30, 2026. Quick answer: The Nebraska School Employees Retirement System reviews retiree benefits for a COLA each July 1, using the change in the CPI-W. The handbook caps Tier One at 2.5% (except for the purchasing power COLA) and Tiers Two, Three and Four at 1.0%, and the statute lets an eligible retiree take whichever of its calculation methods gives the greatest increase. On July 1, 2026, with the CPI up 3.52%, eligible Tier One retirees received 2.5% and Tier 2, 3 and 4 members received 1%. The 2027 COLA is not set yet.
How the School Plan COLA works
The NPERS School handbook says: “After you have been retired for at least one full fiscal year, your benefit will be reviewed for a COLA each July 1.” It adds: “This increase will be determined using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) during the previous fiscal year.” The handbook also notes: “COLA provisions vary depending on tier status.”
Tier One and Tiers Two, Three and Four
For Tier One, the handbook says: “Your COLA is capped at 2.5%. If the CPI-W is 2.5% or less, you will receive the CPI-W, but if the CPI-W is higher than 2.5%, your COLA will be 2.5%.” On purchasing power: “Any time inflation erodes the value of your retirement benefit below 75% of the original purchasing power, your COLA for that fiscal year will be the amount of the CPI-W rate.” “The 2.5% cap does not apply to the 75% purchasing power COLA.”
For the other tiers: “Your COLA is capped at 1.0%. If the CPI-W is 1.0% or less, you will receive the CPI-W, but if the CPI-W is higher than 1.0%, your COLA will be 1.0%. There is no 75% purchasing power COLA provision.” The statute for members hired later reads: “increased annually by the lesser of (a) the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the period between June 30 of the prior year to June 30 of the present year or (b) one percent”.
The statutes split the School Plan at July 1, 2013. Section 79-947.06 opens with “On July 1 of each year, for school employees who became members prior to July 1, 2013:” and says each eligible retiree “shall receive an annual benefit adjustment under the cost-of-living adjustment calculation method that provides the retired member or beneficiary the greatest annual benefit adjustment increase.” A third calculation method in the statute pays “the lesser of (i) the cumulative change in the Consumer Price Index for Urban Wage Earners and Clerical Workers from the last adjustment of the total monthly benefit of each retired member or beneficiary through June 30 of the year for which the annual benefit adjustment is being calculated or (ii) an amount equal to three percent per annum compounded for the period from the last adjustment of the total monthly benefit of each retired member or beneficiary through June 30 of the year for which the annual benefit adjustment is being calculated.” That method is open to “a retired member or beneficiary who has been receiving a retirement benefit for at least five years if the member had at least twenty-five years of creditable service”. and to the disability and death-benefit recipients and other conditions the statute lists. The handbook names the groups Tier One and Tiers Two, Three and Four without spelling out the hire dates, so check which tier your NPERS statement shows.
The July 2026 increase
NPERS reported on July 14, 2026: “For the year ending June 30, 2026, the CPI increase was 3.52%. As a result, eligible School, Judges, and Patrol Tier 1 members received an increase of 2.5% and Tier 2/3/4 members received an increase of 1%.” It adds: “July retirement benefits, paid at the end of the month, included the COLA adjustment.” The notice covers the School, Judges and Patrol plans together, and this page covers the School Plan only.
For the year before, an NPERS retiree update says: “For the year ending June 30, 2025, the CPI increase was 2.56%. As a result, School, Judges, and State Patrol retirees received a 2.5% increase if their tier of benefits includes the 2.5% cap.”
Where 2027 stands
The July 2027 School Plan COLA is not set yet: the statutes measure CPI-W from June 30 of one year to June 30 of the next, so it cannot be known before that CPI-W is out, and this page updates when NPERS posts its July notice.
A worked example
As a computed illustration (not a source figure), a retiree with a monthly benefit of $2,000 (invented, for the computation) would see an increase of $50 (computed) a month at the Tier One cap of 2.5%, or $20 (computed) a month at the 1.0% cap, when the CPI-W change is above the cap.
Common mistakes
- Assuming every School Plan retiree gets the 2.5% cap. Tiers Two, Three and Four are capped at 1.0%.
- Expecting a COLA before a full fiscal year of retirement. NPERS reviews the benefit each July 1 after at least one full fiscal year of retirement.
- Applying the 2026 result to 2027. The 3.52% CPI increase belongs to the year ending June 30, 2026 and the next COLA uses the next year of CPI-W.
Related: Nebraska NPERS School Plan retirement decisions, how public pension decisions work, and whether Nebraska taxes pensions.
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Answer againSources
- Nebraska Public Employees Retirement Systems, Nebraska School Employees Retirement System Handbook: npers.ne.gov
- Nebraska Legislature, Neb. Rev. Stat. 79-947.07 (members on or after July 1, 2013): nebraskalegislature.gov
- Nebraska Legislature, Neb. Rev. Stat. 79-947.06 (members prior to July 1, 2013): www.nebraskalegislature.gov
- Nebraska Public Employees Retirement Systems, School, Judges, & Patrol COLA (NPERS news page): npers.ne.gov
- Nebraska Public Employees Retirement Systems, Retiree Update for School, Judges, & Patrol Retirees (January 2026): npers.ne.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.