April 14, 2026 sracommunications@sra.state.md.us
Cost-of-living adjustment (COLA) payable to eligible payees in July 2026

BALTIMORE -Eligible retirees and beneficiaries of the Maryland State Retirement and Pension System will notice an increase in their monthly allowance beginning in July as the 2026 cost-of-living adjustment (COLA) takes effect.

This year’s COLA rate is 2.698%. The System’s total investment performance for the calendar year ending on December 31, 2025 (+13.33%), exceeded the 6.8% assumed rate of investment return established by the Board of Trustees. Therefore, the statutory rate cap for the portion of an allowance based on creditable service earned on or after July 1, 2011, is 2.5% for many payees.
About the COLA formula

The COLA rate is determined by the calendar year-over-calendar year change in the annual average Consumer Price Index (all urban consumers – United States city average – all items, not seasonally adjusted, 1982–1984 = 100) as published by the United States Department of Labor, Bureau of Labor Statistics (BLS).

Although the BLS has traditionally released 12 monthly CPI reports each year, following last year’s federal government shutdown which began on October 1, 2025, BLS did not publish a Consumer Price Index figure for October 2025. This left a question about how to calculate the annual average CPI for calendar year 2025.

To address the missing October CPI value, legislation from the Maryland General Assembly (Senate Bill 724 and House Bill 1138) directs the State Retirement Agency to calculate the October 2025 CPI value by averaging the September and November 2025 CPI values. This method yields results consistent with prior-year calculations.

The information below summarizes the COLA that generally applies to payees of the various State systems beginning in July:
 

Correctional Officers’ Retirement System
•2.698% on the portion of the allowance based on creditable service earned before July 1, 2011,and 2.5% on the portion earned on or after July 1, 2011.

Employees’ and Teachers’ Pension Systems
•2.698% on the portion of the allowance based on creditable service earned before July 1,2011, and 2.5% on the portion earned on or after July 1, 2011.

Employees’ and Teachers’ Retirement Systems
• 2.698% (applies to individuals under Selections A, B, or C)

Law Enforcement Officers’ Pension System
• 2.698% on the portion of the allowance based on creditable service earned before July 1, 2011, and 2.5% on the portion earned on or after July 1, 2011. Transferees from the Employees’ or Teachers’ Retirement System under Selections A or B who did not elect to participate in the Law Enforcement Modified Pension Benefit. will receive 2.698% if subject to Selection A or Selection B.
Local Fire and Police System
• 2.698%
State Police Retirement System
• 2.698% on the portion of the allowance based on creditable service earned before July 1, 2011, and 2.5% on the portion earned on or after July 1, 2011.

This COLA does not apply to most payees of the Legislative Pension Plan and Judges’ Retirement System. The majority of payees from these systems receive adjustments based on the salary increases received by active legislators and judges.
The rules concerning COLAs are set forth in the Md. Code Ann., State Personnel and Pensions Article, Title 29, Subtitle 4. If there are any questions of interpretation, the law will control to resolve them.
Frequently asked questions

Q. Who qualifies to receive the COLA this July?
A. A payee must be receiving an allowance based upon a retirement that was effective on or before July 1, 2025, to receive this year’s COLA. Those receiving an allowance based on a retirement that was effective after July 1, 2025 (August 2025 or later) will receive their first COLA increase in July 2027.

Q. Which payment will include the new COLA?
A. Qualifying payees will see the adjustment in their July 2026 allowance payments, payable July 31, 2026.
 

Q. How is the annual COLA increase applied? Is it a simple or compounding COLA?
A. A payee’s benefit system determines how the annual increase is calculated for their payment. Eligible payees receive either a compound rate or a simple rate. For payees receiving the compound rate, the COLA increase is based on their current allowance, allowing COLAs to compound over time. Under the simple rate, the increase is based on the initial allowance.

Q. What are Selections A, B, and C for the Employees’ and Teachers’ Retirement Systems?
A. Under Selection A, the member elected to pay a higher contribution rate (generally 7% of pay) to maintain all benefits, including unlimited COLA. Under Selection B, the member continued to pay the pre-1984 contribution rate (generally 5% of pay) to maintain all benefits except unlimited COLA. COLA is capped at 5%. Under Selection C, the member chose a combination, or two-part (bifurcated) benefit. The portion of the allowance based on creditable service prior to the election is calculated based on the member’s prior election of Selection A or B, and the portion based on creditable service after electing Selection C is calculated at retirement as a pension system benefit.

The Maryland State Retirement Agency is charged with the fiduciary responsibility for properly administering the retirement and pension allowances of more than 177,000 retirees and beneficiaries as well as the future benefits for more than 250,000 active and former members. These groups include state government employees, teachers, law enforcement personnel, legislators, judges and local government employees and firefighters whose employers have elected to participate in the system.
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