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The TCDRS office will be closed on Thursday, April 6 at 2 p.m. and Friday, April 7 in observance of Good Friday.
GASB 68 and Repeating COLAs
Under the GASB standards, if you regularly adopt a COLA for retirees, it could be designated as a “repeating COLA” for financial reporting purposes.
A repeating COLA designation causes your net pension liability on your balance sheet to increase, resulting in greater pension expense. This is because we are required to assume future COLAs when calculating your net pension liability. Even if you prefund the COLA through an additional employer contribution, it will still impact your financials in this way. Remember, funding calculations are different from financial reporting calculations required under the GASB standards.
The repeating COLA designation has no effect on your plan funding. It does not impact your plan’s funded ratio or your required contribution rate, which are calculated for the purpose of funding your plan.
As a rule of thumb, you can pass a COLA for your retirees every three years and not receive a repeating COLA designation.
TCDRS will monitor your COLA adoptions each year and alert you if, by adopting a COLA for the next year, you would receive a repeating COLA designation under these GASB standards.
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