A smaller deposit is coming at the end of October for tens of thousands of Pennsylvania school retirees, and the state’s retirement system says that is exactly what should happen. The Pennsylvania Public School Employees’ Retirement System, known as PSERS, paid 30,273 eligible retirees their first cost-of-living increase at the end of September, with July and August catch-up pay rolled in. October’s payment drops the catch-up and keeps only the new, higher monthly rate.
For the retirees, the practical question is whether the October amount is right. PSERS says every eligible retiree gets a letter the week of Oct. 12 stating the October payment, so anyone who sees a deposit well below September’s can match it against that letter before assuming something went wrong.
The Oct. 12 week for the PSERS letters comes first, then the end-of-October deposit, which is the first at the new ongoing rate.
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Why September ran high and October will not
The September payment combined the new COLA-adjusted monthly benefit with the retroactive increases for July and August. PSERS put the extra money in that one payment at about $25.4 million. The ongoing addition is about $8.46 million a month, so the September total works out to roughly three months of the increase, one current month and two months of catch-up.
By simple arithmetic, a retiree at the average would have received about $559 in retroactive pay on top of the new monthly figure. That is the portion that disappears in October. The ongoing amount does not shrink; the one-time catch-up simply does not repeat. PSERS says the October amount “will be lower than the September payment” and that it reflects the new COLA-adjusted benefit going forward.
The averages behind the title
The system reports that the average monthly pension among those paid rose $279.43, from $1,616.24 to $1,895.67. That is roughly a 17 percent increase, by arithmetic from PSERS’s two averages. The median monthly pension rose from $1,505.67 to $1,769.74. The figures describe only eligible retirees, those who retired on or before July 1, 2001, and not all of the system’s school retirees.
PSERS Executive Director Uri Monson said in the announcement that “our employees worked hard to ensure the cost-of-living adjustment was reflected” in the September payment.
The 3 percent still being processed
PSERS said in an Aug. 5 announcement that 97 percent of eligible retirees would get the new rate in September, retroactive payments for July and August included. The remaining 3 percent have special circumstances that require additional processing, so their first COLA payment can come on a different schedule. That fits the numbers: 30,273 paid in September against the estimate of more than 31,200 eligible.
The same announcement describes the COLA as a permanent supplemental percentage increase to existing benefits, effective July 1, 2026, and says that under the PSERS Retirement Code only the General Assembly can authorize one. It was approved as part of the 2026-27 budget package.
How Act 21 sets the size of the raise
The increase comes from Act 21 of 2026, which Gov. Josh Shapiro signed on July 12, 2026, according to the PSERS COLA page. The law applies to retirees who retired on or before July 1, 2001, and the size of each raise depends on retirement date, in tiers from 15 percent to 24.5 percent. The 24.5 percent tier goes to those who retired before July 2, 1982. PSERS estimates that more than 31,200 retirees will receive about $104 million in the 2026-27 fiscal year, a figure larger than the 30,273 paid in September because the estimate covers the full year.
A summary from the Pennsylvania Municipal League, published after the signing, describes the same law as lifting annuities of retired teachers, police officers and firefighters by 15 to 24.5 percent, effective Aug. 1, 2026, retroactive to July 1. The $104 million comes on top of roughly $7.7 billion a year in pension benefits PSERS already pays.
Checking the October deposit against the PSERS letter
The letter due the week of Oct. 12 is the document to hold the October deposit against. It states the amount PSERS will pay at the end of October, which reflects the new ongoing benefit without July and August catch-up. PSERS’s announcement lists a press contact for questions: Aimee Inama, press secretary, at 717-720-4704.
Retirees who budgeted around the September deposit should plan from the new ongoing figure instead. For a retiree at the system’s average, that figure is the $1,895.67 monthly benefit reported by PSERS, before any withholding, and each person’s own number is in the letter.
PSERS sent a letter in the first week of September confirming eligibility and another the week of Sept. 14 detailing the September amount, so the October letter is the third piece of mail in the sequence. Anyone who did not get a COLA but thinks they should have can check the retirement-date rule on PSERS’s COLA page: the cutoff is July 1, 2001, and the tier is set by the retirement date.
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This article was produced with AI assistance and reviewed by The Financial Wire’s editorial team.
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.
