Why no COLA? The real story.
You haven't had a permanent, compounding cost-of-living adjustment to your pension since 2017. You have every right to be angry. Here's what's actually happening to the system that promised to protect you — and what SEANC is fighting to change.
We hear you. And you're right to be frustrated.
Nine years without a real COLA is not a small thing. It is a steady erosion of the pension you were promised — and that you earned with decades of service to North Carolina.
The one-time bonuses you've received since 2018 are not COLAs. They don't compound. They don't carry forward. The moment the check clears, your monthly pension goes right back to what it was before.
You deserve honest answers about why this keeps happening — and a real plan to fix it. That's what this page is for.
Your pension rests on three legs. Two of them are buckling.
The North Carolina pension system was designed as a "three-legged stool." Employees contribute. The employer contributes. Investments make up the rest. When all three legs are strong, the system can afford to give retirees regular cost-of-living adjustments. Right now, the system can't even afford to keep up — let alone get ahead.
Employees
ShrinkingActive state employees contribute 6% of every paycheck to the pension system. That percentage hasn't changed in decades. What has changed is how much that 6% actually adds up to.
North Carolina has roughly the same number of state employees today as it did in 2009 — even as the state's population has grown by more than two million people. And the wages those employees earn have not kept pace with inflation. In real, purchasing-power terms, the average state employee earns less today than they did fifteen years ago.
The result: fewer dollars flow into the system from active employees than its designers ever expected. The legislature could fix this with real pay raises and by filling vacant positions — both of which SEANC has been demanding for years. They have chosen not to.
Employer
StrainedThe legislature's contribution to the pension is the leg that has been propping up the entire system. Not out of generosity — but because the math leaves no other choice.
In FY 2016, the legislature's retirement-only contribution to TSERS was 9.15% of payroll. By FY 2024 it had climbed to 17.64%. The Board of Trustees has recommended 17.49% for FY 2027. That is nearly a doubling of the employer rate in roughly a decade — and it's all going to keep the existing system solvent, not to give retirees a raise.
Here is something most retirees have never been told: those one-time bonuses you received in 2017, 2019, 2022, 2023, and 2024 were paid for by raising the employer contribution rate. The 4% bonus in 2023 added 1.24% to the employer rate. The 4% bonus in 2024 added another 1.20%. They aren't "free" — they come from the same pot of money that could have funded a real COLA.
The reason the employer rate keeps climbing is partly that the legislature has failed to pay active employees enough or hire enough of them — and partly because they keep using rate increases to fund non-compounding bonuses instead of permanent COLAs. Fix the pay and staffing problems, stop paying for one-time bonuses out of the employer rate, and there is room to discuss real retiree relief.
Investments
UnreliableHere is the leg that should be paying for your COLA.
By design, the pension system is supposed to fund cost-of-living adjustments through investment gains — when the system earns more than its target return, the surplus can be used to give retirees a raise. That's how COLAs were paid for in 1981, 1985, 1990, 1996, 2000, and most years in between.
But the system's assumed rate of return has been ratcheted down from 7.25% to 6.50% as markets have grown harder to predict. And actual returns have whipsawed: a strong 2021 followed by a −10.38% loss in 2022, then another actuarial investment loss in 2024.
Translation: investment returns are being used to keep the system from falling further behind, not to give retirees raises. Until the system earns substantially more than its target return for a sustained period, no investment-funded COLA is on the table.
The hidden Wall Street fees no one is allowed to see.
Investment returns aren't the only thing standing between you and a COLA. There's another quiet drag on the system: the fees paid to Wall Street money managers to invest your pension — and a state law that prevents the public from finding out exactly how much is being paid, or to whom.
Under North Carolina law, the fees paid on the pension's "alternative investments" — hedge funds, private equity, and other complex vehicles that make up roughly a fifth of the portfolio — are shielded from public disclosure as "trade secrets." The treasurer's office knows what's being paid. The public, the legislature, and even retirees do not.
Every dollar paid in opaque fees is a dollar that doesn't compound for the system. Over decades, that's hundreds of millions of dollars that could have gone toward funding a COLA.
Former State Treasurer Dale Folwell made cutting these fees a signature priority of his time in office, ultimately reducing pension investment costs by an estimated $650 million over his two terms. That work mattered — but the underlying secrecy law remains on the books, and the pressure to chase higher-fee alternative investments continues.
The math is real. But so is the choice.
Two legs of the stool — employees and investments — can't currently carry their share of the load. The third leg, the employer, is already strained from holding up the rest.
That's the math. But the math didn't happen by accident. It is the cumulative result of legislative choices — choices to keep state employee pay low, to leave thousands of positions vacant, and to fund pension obligations through one-time supplements instead of recurring commitments.
The 2% bonus you received in 2021. The 4% bonuses in 2022 and 2023. None of those carry forward. None of them raise your base pension by a single dollar. A retiree who received a $1,200 bonus in 2023 has the same monthly pension today that they had in 2017.
That is not a math problem. That is a policy choice — one the legislature can change.
The head of the NC Retirement Systems agrees.
Don't take SEANC's word for any of this. We sat down with Sam Watts, Executive Director of the North Carolina Retirement Systems Division — the man who runs TSERS day-to-day — for a candid conversation about why retirees haven't seen a real COLA in nearly a decade, and what it would actually take to change that.
He walks through the same three-legged math you just read about — confirming what SEANC has been telling members all along, and adding details only the system's own director can provide.
Subscribe to The SEANC View wherever you get your podcasts.
Make your legislators hear this.
The math problem is real. The policy choice is theirs. Tell them what your retirement is worth.
Data Sources
- TSERS Actuarial Valuation, December 31, 2024 (NC Retirement Systems Division)
- TSERS Retiree Increases or Supplements Since 1981 (myNCRetirement.gov)
- TSERS Employer Contribution Rate History (NC Retirement Systems Division)
- NC Office of State Human Resources, State Employee Statistics
- U.S. Bureau of Labor Statistics, NC State Government Employment data (FRED, SMU37000009092000001)
- TSERS Employer Contribution Rates (Retirement Rate Only), FY 2016–2027 — prepared by staff of NC Retirement Systems Division, May 2026
- Session Law 2023-134, §39.26.(c), TSERS employer contribution rates effective July 1, 2024
- Retirement Monitor – June 2024, NC Retirement Systems Division (retirement-only rate breakdown)
- "Looting the Pension Funds: North Carolina's $87 Billion TSERS" — Edward Siedle, Benchmark Financial Services (2014), commissioned by SEANC
- NC Department of State Treasurer press releases on investment cost reductions, 2017–2024