SB 1779 - Current law provides that retired members of the Public School Retirement System ("PSRS") and the Public Education Employee Retirement System ("PEERS") may receive yearly cost of living adjustments on monthly retirement allowances, but the total of the increases granted to a retired member or the beneficiary may not exceed 80% of a member's retirement allowance established at retirement or as previously adjusted. This act provides that the limitation on the total of the increases granted to a retired member or the beneficiary shall be subject to annual increases approved by the Board of Trustees of PSRS/PEERS ("Board") every December 31st, except such increases to the limitation shall not exceed 2% and shall depend on the performance of the system's investments. If the system's investments earn 2% or greater returns in excess of the investment return rate adopted by the Board, then the percentage of retirement allowance for the total of increases granted shall be increased by 2%. The total increases granted to a retired member or beneficiary shall not exceed 80% of the retirement allowance established at retirement or as previously adjusted. If a retired member or beneficiary has already reached the 80% cap, such retired member or beneficiary shall be granted a 2% cost of living adjustment for that year unless the system's investments fail to earn at least 2% of returns in excess of the investment return rate adopted by the Board, in which case the member shall not get a cost of living increase. This 2% cost of living increase shall not be cumulative. This act is identical to HB 2095 (2026) and is similar to SB 709 (2025), HB 329 (2025), and SB 1421 (2024). KATIE O'BRIEN

2026 Regular Session

Bill increases teacher pension COLA caps by up to 2% annually when fund investments exceed targets, providing variable inflation protection tied to market performance.

Second Read and Referred S Local Government, Elections and Pensions Committee

Legislative bill overview

SB 1779 modifies Missouri's public school teacher and education employee retirement systems by allowing the cost-of-living adjustment (COLA) cap to increase annually by up to 2% when investment returns exceed targets. Currently, retirees cannot receive total increases exceeding 80% of their original retirement allowance; this bill makes that 80% cap itself adjustable based on pension fund investment performance.

Why is this important

Public school retirees on fixed incomes face erosion of purchasing power due to inflation, but pension systems must balance member benefits against long-term financial sustainability. This bill attempts to provide additional inflation protection when the pension fund performs well, while protecting the system during poor investment years—directly affecting thousands of Missouri retirees' monthly income.

Potential points of contention

Investment-dependent benefits: Retirees' cost-of-living adjustments would fluctuate with market performance, creating unpredictability about future income and potentially leaving seniors vulnerable to market downturns

"Non-cumulative" 2% provision: Retirees at the 80% cap receive only a one-time 2% boost (not compounded annually), which may limit long-term inflation protection compared to traditional cumulative adjustments

Pension fund solvency concerns: Expanding benefits ties to investment returns could strain PSRS/PEERS finances if markets underperform, potentially requiring higher employer/employee contributions or benefit reductions elsewhere