COLAs, or cost-of-living adjustments, are annual increases of the initial benefit, i.e., the benefit determined as of the decrement date. Hence, COLAs apply only in years after the decrement from active status has occurred and apply to active Benefit Definitions and to Inactive Benefits defined in the Census Specifications. Thus COLAs differ from increase rates, which, in the pension modes, apply to active member benefits only and are applied to the elements (i.e., regulatory items, benefit formula components and accrual basis components) inherent in computing the benefit amount, hence are applied only until the decrement occurs.

COLAS may be applied before benefit payments commence (i.e., during a deferral period), after benefit payments commence (i.e., during the payment period), or both. The rates of annual increase are expressed as percentages of the benefit amount (the initial benefit amount at decrement for simple interest COLAs, the preceding year’s benefit amount for the, more common, compound interest COLAs). Enter the COLA rate, however, as a number, not as a percentage. Although COLA rates generally range between 0 and 1, rates outside that range, including negative rates, may be entered.

Except for U.K. mode, each Benefit Definition included in the Plan Definition contains a section under which you specify whether COLAs apply to that active member benefit. Similarly, except in U.K. mode, each Inactive Benefit included under the Inactive Data topic of the Census Specifications contains the COLAs button, which you access to specify whether COLAs apply to that inactive member benefit. If you check the Apply COLAs from assumptions box for a Benefit Definition included in your Plan Definition or for an Inactive Benefit included under the Inactive Data topic of your Census Specifications, then be sure to specify the applicable COLA rates under the Cost-of-Living Adjustments topic of Valuation Assumptions and, for a Core Projection, the Increase & Crediting Rates topic of Projection Assumptions.

A COLA rate table has a table interface that permits COLAs to vary by age and sex. Payment period COLAs may also vary by duration since commencement of payments or by age and duration (i.e., the table is select and ultimate). Note that if COLA rates are constant, and do not vary by calendar year or according to the contents of a coded database field, then it is not necessary to create COLA rate tables.

ProVal looks up table values based on the member’s age as defined by the date of birth (or attained age) parameter of your Census Specifications. This parameter applies to both active and inactive members. ProVal looks up table values based on duration since the payment commencement date specified by the payment form parameters of the active member Benefit Definition or the Inactive Benefit included under the Inactive data topic of the Census Specifications. Age and duration for table lookups are always computed as whole (not fractional) numbers. For details about the age lookup, see Active Data and Inactive Data - pension modes. For details about the payment commencement date used for a duration lookup, see Payment Form Definitions - pension modes for active members and the discussion of payment forms in the Command Reference article Inactive Benefits for inactive members.