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Lawmakers recommend solution to increase public pension benefits; change unlikely before 2025

By Brandon Smith

Posted October 25, 2023

Lawmakers did not include either a cost-of-living adjustment or an extra month of benefits known as a 13th check in the 2023 state budget. (Brandon Smith/IPB News)

A legislative study committee recommendation adopted Tuesday would see a blend of cost-of-living adjustments, or COLAs, and extra monthly payments to increase pension benefits for public retirees.

Any change is expected in 2025 — with short term help for retired public servants unlikely.

Lawmakers have long debated whether to increase public pension benefits in each state budget using either a COLA or a 13th check, one extra month of benefits. But for a long-term solution, the recommendation includes both. Older retirees would get a 13th check every year, while newer retirees would get a COLA going forward.

Jessica Love is executive director of the Retired Indiana Public Employees Association, representing about 40,000 public pension recipients. She told lawmakers her members overwhelmingly do not prefer the COLA.

“And we have 10 percent that are getting a $200 or less pension — that’s $2 a month,” Love said. “They’re getting, you know, $24 a year.”

Where the dividing line will be between retirees who get the 13th check and those that get the COLA — whether a past date, the present or sometime in the future — is a key issue left to be decided.

Study committee vice chair Rep. Jeff Thompson (R-Lizton) said figuring out the dividing line is tricky.

He used an example of two teachers getting $500 monthly pensions. If they both lived 40 more years, the one who gets a 13th check would get $20,000 more.

“If you look at just a 0.5 percent COLA and you compound that over that 40 years, we’re talking about over $120,000 increase for that teacher,” Thompson said.

Thompson said any long-term change will wait for 2025, when lawmakers write a new state budget.

But the current budget didn’t include either a COLA or 13th check. And Thompson was asked whether retirees can expect help in 2024.

“We’ll discuss that,” Thompson said. “I’m not sure on that part. But there’ll be some discussion there, I’m sure.”

Sen. Brian Buchanan (R-Lebanon), who chaired the study committee examining the issue, said lawmakers typically don’t reopen the state budget in a non-budget session.

Brandon is our Statehouse bureau chief. Contact him at bsmith@ipbs.org or follow him on Twitter at @brandonjsmith5.

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