Short answer: each July 1, VRS raises retirees' benefits with a COLA based on the CPI-U. In Plan 1 it's the first 3% of inflation plus half of the next 4%, up to 5%; in Plan 2 and the Hybrid plan, the first 2% plus half of the next 2%, up to 3%. The first raise waits at least one full calendar year. See which plan, early retirement (it can delay the first COLA) and payment options. See the first COLA date for the Plan 1 example in the calculator.
How big
- Plan 1: First 3% increase in the CPI-U and half of any additional increase (up to 4%), for a maximum COLA of 5%. Plan 1 Handbook p. 56, Cost-of-Living Adjustments; Va. Code § 51.1-166(B)
- Plan 2 and Hybrid: First 2% increase in the CPI-U and half of any additional increase (up to 2%), for a maximum COLA of 3%. Plan 2 Handbook p. 57, Cost-of-Living Adjustments; Va. Code § 51.1-166(B); Hybrid Handbook p. 64, Cost-of-Living Adjustments; Hybrid Plan Overview p. 2; Va. Code § 51.1-166(B)
Based on the annual monthly average of the CPI-U (calendar year), published by the Bureau of Labor Statistics; VRS reviews it annually and any increase takes effect the following July 1. No inflation or deflation: 0%. Retiree Handbook p. 7, Cost-of-Living Adjustment (COLA); Va. Code § 51.1-166(B), (C)
| Inflation (CPI-U) | 0% | 1% | 2% | 3% | 4% | 5% | 6% | 7% | 8% |
|---|---|---|---|---|---|---|---|---|---|
| Plan 1 COLA | 0% | 1% | 2% | 3% | 3.5% | 4% | 4.5% | 5% | 5% |
| Plan 2 and Hybrid COLA | 0% | 1% | 2% | 2.5% | 3% | 3% | 3% | 3% | 3% |
Our calculation from the rule above. VRS's actual COLA each year depends on that year's CPI-U.
When your first COLA comes
- Unreduced retirement, or reduced with at least 20 years of service credit: COLA starts July 1 after one full calendar year (January 1 - December 31) from the retirement date.
- Reduced with fewer than 20 years: July 1 after one full calendar year from the date you would have become eligible for an unreduced benefit.
Examples for an unreduced retirement, by our reading of "one full calendar year":
- Retire January 1, 2027: first COLA July 1, 2028.
- Retire July 1, 2027: first COLA July 1, 2029.
- Retire December 1, 2027: first COLA July 1, 2029.
Two VRS wordings of the first-COLA wait ("July 1 after one full calendar year" and "July 1 of the second calendar year after retirement") give different dates for a January 1 retirement.
We follow the member handbook's "one full calendar year" wording: a January 1, 2027 retirement gets its first COLA July 1, 2028.
Plan 1 Handbook p. 56, Cost-of-Living Adjustments; p. 12; Actuarial Appendix p. 14If you retire reduced with fewer than 20 years, the first COLA waits for the date you'd have qualified unreduced. The sources don't say whether that date assumes you'd have kept working.
We assume you stop working at retirement, so it's the date your age alone (or the Rule of 90 with your service then) would qualify you.
Plan 1 Handbook p. 56, Cost-of-Living Adjustments; Va. Code § 51.1-166(D)(4)State law lets a member who was within five years of unreduced retirement on January 1, 2013 skip the longer COLA wait. The member handbooks don't mention this.
We apply it when your projected unreduced date is on or before January 1, 2018.
Va. Code § 51.1-166(D)(3); Actuarial Appendix p. 14Exceptions and other rules
- July 1 after one full calendar year from when the benefit begins if you retire on disability, retire directly from VSDP/VLDP short- or long-term disability, are involuntarily separated and retire under the Workforce Transition Act or Transitional Benefits Program, or die in service with a monthly death-in-service benefit payable. Plan 1 Handbook p. 57, Exceptions to COLA Effective Dates
- With the PLOP or Survivor Option the COLA is figured on the reduced benefit; with the Basic Benefit or Advance Pension Option it is figured on the Basic Benefit. Plan 1 Handbook p. 20, Benefit Payout Options and the COLA
- COLAs received during a previous retirement do not resume when you retire again; the COLA is calculated as if retiring for the first time. Plan 1 Handbook p. 68, Retiring Again
From the sources
- Plan 1 COLA: the first 3% of CPI-U inflation plus half of the next 4%, for a maximum of 5% a year.Plan 1 Handbook p. 56, Cost-of-Living Adjustments
- Plan 2 and Hybrid COLA: the first 2% of CPI-U inflation plus half of the next 2%, for a maximum of 3% a year. There's no COLA on the Hybrid defined contribution part.Plan 2 Handbook p. 57; Hybrid Plan Overview p. 2
- COLAs take effect each July 1, based on the calendar-year average CPI-U. With no inflation, or with deflation, the COLA is 0%.Retiree Handbook p. 7, Cost-of-Living Adjustment
- First COLA: if you retire unreduced, or reduced with at least 20 years of service, it starts July 1 after one full calendar year (January to December) from your retirement date.Plan 1 Handbook p. 56, Cost-of-Living Adjustments
- If you retire reduced with fewer than 20 years, the first COLA waits until July 1 after one full calendar year from the date you'd have become eligible for an unreduced benefit.Plan 1 Handbook p. 56
- The COLA is figured on the Basic Benefit for the Basic Benefit and the Advance Pension Option, and on the reduced amount for PLOP and Survivor Option choices.Plan 1 Handbook p. 20, Benefit Payout Options and the COLA
Questions
How big is the VRS COLA?
Plan 1: First 3% increase in the CPI-U and half of any additional increase (up to 4%), for a maximum COLA of 5%. Plan 2 and Hybrid: First 2% increase in the CPI-U and half of any additional increase (up to 2%), for a maximum COLA of 3%.
When do I get my first VRS COLA?
Unreduced retirement, or reduced with at least 20 years of service credit: COLA starts July 1 after one full calendar year (January 1 - December 31) from the retirement date. Reduced with fewer than 20 years: July 1 after one full calendar year from the date you would have become eligible for an unreduced benefit.
Is there a COLA on the Hybrid defined contribution account?
No. The COLA applies only to the pension (defined benefit) part.
Source: VRS Plan 1, Plan 2 and Hybrid Retirement Plan Handbooks for Members, 07-2026 editions (VRSHB-1 07-2026, VRSHB-2 07-2026, HybridHB 07-2026), Plan 1 Handbook pp. 20, 56, 57, 68; Plan 2 Handbook p. 57; Hybrid Handbook p. 64. Also: Hybrid Plan Overview p. 2; Retiree Handbook p. 7; Actuarial Appendix p. 14; Code of Virginia § 51.1-166. Last reviewed .