Benefits get a COLA each July 1. It equals the CPI-W increase (third quarter over the prior base year), at least 0% and at most 3.5%. When SDRS's baseline fair value funded ratio is under 100%, the maximum is restricted to what keeps the system 100% funded. You must have received full benefit payments, and not worked for an SDRS employer, for the whole prior fiscal year (July 1 - June 30). Foundation Handbook (July 2024), p. 13, Cost-of-Living Adjustments; Generational Handbook (July 2024), p. 12; SDCL 3-12C-104, 3-12C-704
July 2026: 1.56%. Inflation (CPI-W) was 2.76%, but SDRS's fair value funded ratio was 93.5%, so the COLA was held to the restricted maximum of 1.56%. SDRS Update (June 2026), slide 14, July 2026 COLA Calculation, and SDRS Update for the LRC Executive Board (Aug. 26, 2026), slide 7
Preliminary estimate for July 2027: 1.95% - 2.05%. It's SDRS's preliminary figure from August 2026. The actual July 2027 COLA depends on inflation and funding.
SDRS Update for the LRC Executive Board (Aug. 26, 2026), slides 7 and 13Every COLA since 2011
| July | COLA | Inflation (CPI-W) | Maximum |
|---|---|---|---|
| 2026 | 1.56% | 2.76% | 1.56%restricted |
| 2025 | 1.71% | 2.49% | 1.71%restricted |
| 2024 | 1.91% | 3.2% | 1.91%restricted |
| 2023 | 2.1% | 8.75% | 2.1%restricted |
| 2022 | 3.5% | 5.92% | 3.5% |
| 2021 | 1.28% | 1.28% | 1.41%restricted |
| 2020 | 1.56% | 1.56% | 1.88%restricted |
| 2019 | 2.03% | 2.79% | 2.03%restricted |
| 2018 | 1.89% | 1.96% | 1.89%restricted |
| 2017 | 2.1% | 0.76% | 2.8%restricted |
| 2016 | 3.1% | -0.41% | 3.1%restricted |
| 2015 | 3.1% | 1.7% | 3.1%restricted |
| 2014 | 3.1% | 1.49% | 3.1%restricted |
| 2013 | 2.1% | 1.66% | 2.8%restricted |
| 2012 | 3.1% | 4.25% | 3.1%restricted |
| 2011 | 2.1% | 1.49% | 2.4%restricted |
The maximum was restricted below 3.5% in 15 of these 16 years. Over the last ten, the COLA averaged 1.96%. The table starts in 2011, where SDRS's valuation table does.
When your first COLA comes
The COLA is a percentage of your benefit, so it's worth more on a bigger check; see the SDRS formula.
- Benefit starts July 1, 2026: first COLA July 1, 2027. Foundation Handbook (July 2024), p. 13, COLA Examples
- Benefit starts August 1, 2026: first COLA July 1, 2028, 23 months later. Foundation Handbook (July 2024), p. 13, COLA Examples
No COLA may be provided unless the member has received benefit payments for at least the consecutive 12-month period before July 1. SDCL 3-12C-104 (as amended by SL 2025, ch. 27)
The handbooks say you get your first COLA after a full fiscal year (July 1 to June 30) of payments with no SDRS job. The law as changed in 2025 says 12 consecutive months of payments before July 1. Both give the same first COLA for a July or August start; we use the 12-month test.
Foundation Handbook (July 2024), p. 13; SDCL 3-12C-104The COLA does not apply to benefits based on accumulated contributions, the variable retirement account or the contribution credit. SDCL 3-12C-703
Retirees who go back to work for an SDRS employer for 1,250 hours or more get no COLA while they work. Working after retirement. Survivors' benefits are covered in survivor benefits.
What it could mean in dollars
Illustration only: $2,000 a month from July 2026, if every COLA matched the July 2026 rate of 1.56%. Real COLAs will differ.
| COLA on | Monthly |
|---|---|
| July 1, 2027 | $2,031.20 |
| July 1, 2030 | $2,127.75 |
| July 1, 2033 | $2,228.89 |
| July 1, 2036 | $2,334.83 |
- Benefits get a COLA each July 1 equal to the CPI-W increase, between 0% and 3.5%, but capped lower when SDRS's funding requires it. The July 2025 COLA was 1.71% and the July 2026 COLA was 1.56%.Foundation Handbook (July 2024), p. 13; SDCL 3-12C-704; SDRS Actuarial Valuation (June 30, 2024), p. 53; SDRS Update for the LRC Executive Board (Aug. 26, 2026), slide 7
- Your first COLA comes after a full year of payments: start in July and you get it the next July; start in August and it takes nearly two years.Foundation Handbook (July 2024), p. 13; SDCL 3-12C-104
- Check with SDRSSDRS's preliminary estimate for the July 2027 COLA is 1.95% to 2.05%.A preliminary estimate; the Board sets the actual COLA.SDRS Update for the LRC Executive Board (Aug. 26, 2026), slide 7
Questions
Does SDRS give a cost-of-living adjustment?
Yes, every July 1. It equals the CPI-W inflation increase, at least 0% and at most 3.5%. When SDRS is less than fully funded, the maximum is set lower so the system stays fully funded.
What was the July 2026 COLA?
1.56%. Inflation (CPI-W) was 2.76%, but the restricted maximum was 1.56%.
When do I get my first COLA?
On the first July 1 after you've had 12 months of payments. Start in July and you get it the next July. Start in August and you wait until the July after that, nearly two years.
Source: SDRS Class A Handbooks (Foundation and Generational members), July 2024, Foundation p. 13; Generational p. 12. Also: SDRS Actuarial Valuation (June 30, 2024) p. 53; SDRS Update (June 2026) slide 14; SDRS update to the LRC Executive Board (Aug. 26, 2026) slides 7, 13; SDCL §§ 3-12C-104, 3-12C-703, 3-12C-704. Last reviewed .