It has been ten years since retired members of the Wyoming Retirement System (excluding members of Paid Firefighter Plan A) were awarded a cost of living adjustment (COLA). During this time we have seen inflation rise, placing undue pressure on some of the most vulnerable of our population, elderly retirees dependent upon a fixed income to meet their day-to-day needs. The average monthly benefit for retirees of the Public Employee Plan was $1,187 in 2008 and after ten years of purchasing power erosion, that buys about $248 less.
The Wyoming Retirement System (WRS) paid some amount of COLA each year between 1998 and 2008, which led to many members with the expectation of an annual COLA as a regular part of pension benefits in retirement. When COLAs stopped at the time of the Great Recession of 2008, many people were caught off guard. With the recovery in the markets, many retirees have asked why COLAs have not resumed.
For background, the Board no longer has the authority to independently award COLAs. State law passed in 2012 both returned that role to the Legislature and set stringent criteria for granting a COLA to ensure the solvency of the funds. Under this criteria, actuarial projections show there won’t be sufficient funding from internal pension assets to provide for a COLA for several decades. This does not mean the Board does not bear responsibility, but it does mean that any potential solution for this problem must be supported by the legislative and executive branches as well.
Especially since the change in the law, WRS has made a concerted effort to educate currently employed members that retirement security is a shared responsibility. Supplemental savings need to be a cornerstone of retirement planning. It is no longer feasible for our members to rely entirely upon a WRS-funded COLA to offset the impacts of inflation. This positions us to consider a joint approach to planning for inflation, one that includes a personal responsibility as well as some support through COLAs. To that end, WRS developed a tool which allows active members to build an inflation-adjusted component into their retirement benefit.
In November, the WRS Board, recognizing the severity of this issue and its compounding effect, passed a resolution supporting education and advocacy for a COLA. Wyoming needs to have policy discussions regarding the impacts to Wyoming retirees and the future of potential funding solutions for inflation through a COLA. The Coalition for a Healthy Retirement is comprised of WRS pension plan stakeholders, including the Wyoming Education Association, Wyoming Public Employees Association, Federated Firefighters of Wyoming, Wyoming Retired Educational Personnel, AARP Wyoming and the Equality State Policy Center. It is taking the lead on bringing this discussion about and telling the stories of our retirees. No one is better positioned to impact this discussion than you, active and retired members of WRS. Please consider contacting the Coalition for a Healthy Retirement if you’d like to learn more and get involved.
I am incredibly proud of how Wyoming’s pensions have fared, even during tough times. We’ve had to make tough choices, including benefit adjustments, as well as contribution increases for current employees and employers. This, along with our efforts to enhance our long-term investment performance, means the Wyoming Retirement System will meet its commitments for decades to come.
The approach we take to COLAs is important to all our members. Retirement security is a shared responsibility, but that does not mean we should not provide some support. We hope that Wyoming policymakers, in response to concerns raised by the Coalition and Wyoming retirees, will take the time this session to look at solutions which would allow for a separately funded COLA. The team at WRS stands at the ready to assist in any way. We owe it to our long-time retirees, many of whom spent their careers in public service in Wyoming, and are living on a very limited fixed income to find a solution — and soon.