The boards of trustees that oversee North Carolina’s two largest public pension systems voted on April 30, 2026, to adopt a policy that ties future retiree benefit improvements to investment results. Under it, a permanent cost-of-living adjustment or a one-time payment can be put forward when the gain on investments measured over five years is greater than the cost of providing the benefit improvement. The policy takes effect July 1, 2027, and remains in force through 2032.
No COLA percentage was adopted, and no raise is promised. What changed is the test that must be met before one can be proposed, which makes the April vote a rule change for retirees of the Teachers’ and State Employees’ Retirement System (TSERS) and the Local Governmental Employees’ Retirement System (LGERS) and not a pay increase.
A gain-versus-cost test replaces automatic debt paydown
According to the N.C. Department of State Treasurer’s April 30 announcement, the boards voted to adopt a policy directing how employer contribution rates are calculated for TSERS. The new language directs the board of trustees to recommend legislative approval of a permanent COLA or one-time payment if the five-year investment gain exceeds the cost of the improvement.
Until now, the release says, the approach has been that all investment gains are allocated to reduce the pension plan’s unfunded liability, which stands at $12 billion for TSERS. Under the earlier practice, a strong market year went entirely toward the shortfall. The new policy lets the boards weigh those gains against what a raise would cost before deciding whether to recommend one.
The condition runs one direction only. A benefit improvement is triggered when five-year gains exceed its cost. When they do not, the test is not met and the earlier priority of paying down the liability governs. Nothing in the release sets a minimum, a schedule or a first year for an increase.
TSERS retirees still depend on the General Assembly
The release states that TSERS requires General Assembly approval for COLAs. For that system, then, the five-year test produces a recommendation from the trustees, which lawmakers must still act on. The policy lowers the bar for the trustees to ask. It does not remove the legislature from the decision.
LGERS works differently in part. The same release notes that its trustees may approve increases in some circumstances without legislative approval, and it puts the LGERS unfunded liability at $6 billion. The announcement does not spell out which LGERS circumstances allow that, and it does not publish the policy text, so the exact reach of the new test for local-government retirees is not documented in the public record reviewed for this article.
What the April 30 vote left undecided
The release is silent on several points a retiree might expect to find. It names no percentage, no dollar amount for a one-time payment, and no year in which the five-year test could first be applied. It also gives no count of the retirees who would be affected. Because the policy only begins on July 1, 2027, no raise can arise under it before that date, and the framework expires with the 2032 end of its stated window unless the boards act again.
The same meeting handled routine business as well. The boards added the Metropolitan Public Transportation Authority, serving greater Charlotte, to LGERS as an employer, with a requirement that it post a $9.6 million surety bond against potential pension liabilities, and designated four LGERS employers inactive. Treasurer Brad Briner was pictured at the meeting listening to a Retirement Systems Division presentation, though the release attributes no quotation about the COLA policy to him or to any other official.
How a formula-driven COLA looks by comparison
North Carolina’s approach is discretionary and market-dependent. Washington State shows how a formula-driven system behaves differently. Its Department of Retirement Systems publishes COLA history showing 3.00% before January 1, 2025, 2.55% from January 1 to July 1, 2025, and 0.00% for July 2, 2025, through July 1, 2026. The department notes a 3% annual maximum for most of its plans, and its page, updated August 21, 2026, showed no 2027 COLA announced.
The contrast is structural. In Washington the adjustment is set by a rule and capped. In North Carolina under the new policy, the adjustment depends on whether investment returns over five years outrun what the improvement would cost, a condition that cannot be known in advance and that a retiree cannot compute from a published schedule.
Where the primary record stands
The controlling document is the Treasurer’s April 30 release, which fixes the vote date, the July 1, 2027 start, the 2032 end, the five-year gain-versus-cost wording and the $12 billion and $6 billion liability figures. Retirees and reporters seeking the full policy text or the April 30 agenda materials can contact the Treasurer’s press line at (919) 814-3820 or press@nctreasurer.com, the contact details printed in the announcement.
Planning around a pension raise that depends on investment returns
Retirees who draw a public pension alongside Social Security and savings withdrawals face the same practical job each year: working out how much of that income is taxed and how it affects Medicare premiums. A pension adjustment that may or may not arrive makes it more useful to have that arithmetic ready.
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This article was produced with AI assistance and checked against the primary sources linked above.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
