Connecticut General Statutes 5-162h – Cost of living adjustment
(a) Notwithstanding the provisions of sections 5-162b and 5-162d, on and after October 1, 1982, the cost-of-living allowance increase for members or their beneficiaries who are receiving benefits under the provisions of tier I shall be up to six per cent if and only if (1) the member was not covered by Social Security for at least half of the period of his state service and (2) the person receiving benefits, either the member, his spouse, or contingent annuitant, has attained age sixty-two provided any member who retired on or after October 1, 1982, and who exercised the option under an applicable collective bargaining agreement to transfer out of part A, without Social Security coverage, and to be covered retroactively under part B, without Social Security coverage, shall be eligible for the cost-of-living adjustment provided in section 5-162d. If on any applicable anniversary date, the Retirement Commission determines that the National Consumer Price Index for urban wage earners and clerical workers for the previous twelve-month period has increased less than such six per cent, the cost-of-living allowance increase shall be equal to the percentage change in such index, provided such cost-of-living allowance increase shall not be less than three per cent.
Terms Used In Connecticut General Statutes 5-162h
- Amortization: Paying off a loan by regular installments.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Fiduciary: A trustee, executor, or administrator.
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
(b) (1) If an actuarial surplus exists for the system, the Retirement Commission may elect to increase benefits of some or all retired employees, provided the granting of such increase is consistent with the commission’s fiduciary obligation to the members of the system as specified in section 5-155a. The procedures in subdivisions (2) and (3) of this subsection shall be used to determine whether an actuarial surplus exists. Any such increase shall be in addition to any other cost-of-living increases automatically provided to retired employees. The lump sum actuarial value of any such increase shall in no event be greater than the difference between the actual unfunded past service liability as determined pursuant to subdivision (3) of this subsection on the appropriate June thirtieth and the expected unfunded past service liability as determined by the table developed pursuant to subdivision (2) of this subsection for that same June thirtieth.
(2) As part of the December 31, 1983, valuation of the system, the system’s actuary shall develop a table of the expected unfunded past service liability for the plan as of each June thirtieth, beginning with June 30, 1984, and ending with June 30, 2026. The table shall be based on the unfunded past service liability generated by the valuation and shall reflect the fact that less than one hundred per cent of the normal cost and full forty-year amortization will be paid into the system prior to July 1, 1986. Such table shall not be adjusted in future years, except to the extent necessary to reflect changes in actuarial assumptions or actuarial cost methods approved by the Retirement Commission. Such table shall be used to determine whether an actuarial surplus exists in the system.
(3) Within six months after each June thirtieth commencing with June 30, 1984, the Retirement Commission shall determine whether the retirement fund had an actuarial surplus for the completed year. Such surplus shall be deemed to exist if, and only if, the following three criteria are all met:
(A) The investment return on the fund has exceeded the interest rate assumption employed for regular valuation purposes by the fund. The investment return for the fund shall be calculated by the following formula:
Where
A is the market value of the fund, including any due but unpaid contribution, as of the first day of the fiscal year;
B is the market value of the fund, including any due but unpaid contribution, as of the last day of the fiscal year; and
I is the market value return of the fund, which shall be equal to B reduced by A, but increased by the total amount of benefits and expenses paid from the fund during the year, and decreased by the total amount of employer and employee contributions for that year, whether or not paid;
(B) The market value of the system’s assets as of the appropriate June thirtieth was greater than fifty per cent of the sum of (i) the liability for retired members and their beneficiaries; (ii) the liability for former members entitled to a deferred vested benefit; and (iii) the then current value of employee contributions, plus interest, for active members. In determining such liabilities, the fund’s actuary shall recognize future cost-of-living adjustments provided under tier I and tier II and shall employ the actuarial assumptions utilized for regular valuation purposes. The actuary may utilize reasonable estimates to make such calculations; and
(C) The actual unfunded past service liability of the system as of the appropriate June thirtieth was less than the expected unfunded past service liability as indicated by the table developed pursuant to subdivision (2) of this subsection for the June thirtieth five years later. In determining the actual unfunded past service liability, the actuary shall employ the actuarial assumptions and procedures utilized for the last regular valuation. The actuary may utilize reasonable estimates to make such calculations.