HomeMy WebLinkAbout2023-01-05-AC-min-att1Town of Lexington
Retirement Fund: 5%Cost of Living Adjustment
Fiscal Year 2023
January 5, 2023
Town of Lexington
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Mass General Law -Chapter 269 of the Acts of 2022:
•A retirement board may grant a cost-of-living increase of not less than 3 per cent
and not greater than 5 per cent on the base amount for fiscal year 2023.
•The cost-of-living increase on the base amount, together with the amount of pension
to which the cost-of-living increase is applied, shall become the fixed pension for all
future purposes, including the application of subsequent cost-of-living adjustments in
future years.
•This may be granted at any time during the fiscal year.
•Shall take effect for the members of a retirement system by a majority vote of the
board of such system (Lexington Retirement Board) and upon local acceptance of
the chief executive officer, as defined in section 7 of chapter 4 of the General Laws
(Lexington Select Board).
* https://malegislature.gov/Laws/SessionLaws/Acts/2022/Chapter269
Town of Lexington
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Considerations for Adoption:
•The current funding schedule and actuarial valuation assume a 3%
Cost of Living (COLA) increase in FY2023, so this would add 2%.
•The 5%COLA will only apply to the COLA base,currently $15,000.
•Increasing from a 3% to 5% COLA will equate to a maximum of
$25/month or $300/year for Retirees.
•The State of Massachusetts and Massachusetts Teacher’s
Retirement Systems have already adopted the 5% COLA. Any
teachers who worked and retired from Lexington will receive the
5% COLA for FY2023.
•The Lexington Retirement Board has voted in favor of granting the
5% COLA for all Lexington retirees.
Town of Lexington
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Fiscal Impact:
•The 5% COLA will add $1.3 million to the Town’s pension liability.
•All else being equal the system would still reach full funding in FY2029.
•Other factors such as changes in asset value, discount rate, or other
actuarial assumptions will further impact the pension liability.
Town of Lexington
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Questions
& Discussion