Source: Illinois Department of Insurance Public Pension Division
In accordance with state law, the Department of Insurance (“Department”) is to annually calculate the maximum annual salary for annuity purposes and the Cost of Living Adjustment to annuity (“COLA”) applicable to Tier II participants and Tier II annuitants in the retirement systems and pension funds established under the Illinois Pension Code, and to make the results of those calculations available to the boards of trustees of those systems and funds by no later than November 1 of each year.
The Department interprets the Illinois Pension Code to provide for a COLA for Tier II annuitants and an increase to the maximum annual salary for annuity purposes of Tier II participants when there has been an annual unadjusted percentage increase in the Consumer Price Index (CPI) for the 12 months ending with the September preceding November 1 of a given year. If the annual unadjusted percentage change in the CPI during that period is zero or is negative, however, then the Department interprets the Illinois Pension Code to require that, in the next calendar year, neither an increase in the maximum annual salary for annuity purposes of Tier II participants nor a COLA for Tier II annuitants shall be provided. For the year ending in September of 2020, the annual unadjusted percentage increases in CPIs are positive; therefore, there will be a COLA for Tier II annuitants and an increase in the maximum annual salary for annuity purposes of Tier II participants.