Elected officials in Swampscott have been discussing a proposed increase to the cost-of-living adjustment (COLA) payments for retirees, and the issue will be up in front of residents next week at the Town Meeting.
Article No. 8 at the Town Meeting would authorize a raise in the base amount used to calculate COLA benefits for retirees, increasing it from $14,000 to $18,000 starting July 1. The article is sponsored by the Swampscott Contributory Retirement Board.
“Swampscott’s current base of $14,000 is $1,538 below the state average of all other systems, of $15,538,” said Tom Driscoll Jr., the chair of the Swampscott Contributory Retirement Board. “This puts our retirees at a disadvantage compared to their peers across the state.”
COLAs are designed to prevent inflation from eroding the value of a fixed income. If prices for food, housing and other necessities increase, a COLA ensures that an individual’s income can still make those essentials affordable.
The COLA is typically calculated using a specific measure of inflation, such as the consumer price index (CPI), which is widely used to track the changes in prices for purchases and common services by households.
The CPI indicates that the US inflation rate was 2.4% for the past year, as of March 2025, according to the US Bureau of Labor Statistics.
COLAs are most often associated with Social Security benefits but they can also be applied to union contracts, pensions and other fixed streams of income.
“Retirees and survivors of the Swampscott Retirement System (SRS) who are eligible to receive an annual COLA receive that adjustment based on only the first $14,000 of the retiree’s allowance and the COLA in any given year cannot exceed 3% by statute,” according to the comment on Town Meeting Article No. 8.
For a town, a financial benefit of a COLA is that it would help residents maintain purchasing power in the face of rising costs, thus keeping pace with inflation. The COLA in this sense offsets the effects of inflation and allows Swampscott residents to maintain financial stability.
Swampscott’s COLA was last increased at the May 2021 Town Meeting from $13,000 to $14,000. At the same time “triggers,” around the CPI and how Swampscott is relative to other towns, were set up before the Swampscott Contributory Retirement Board could request an additional increase.
“The key arguments behind this is really our own financial position. Our town system is funded. Its funded ratio has increased by 31% since 2017, and now we exceed the state at 75.3%,” Driscoll said. “The significant improvement demonstrates our responsible fiscal management.”
The Swampscott Contributory Retirement Board suggested that it would have to return to ask for additional funding later if the full $18,000 is not approved at the Town Meeting.
Board members said they appreciate the Finance Committee’s incremental approach but agreed that the $18,000 figure would better reflect long-term fiscal goals. The recommended $18,000 is the statutory upper limit, meaning $16,000 will be less than state average in just a few years.
During its May 5 meeting, the Finance Committee agreed to support a raise to $16,000. On May 14, the Select Board also supported the $16,000 figure in a 4-1 vote.
If approved, the $18,000 base would increase the town’s unfunded pension liability – or the amount that the system’s obligations exceed its assets – by approximately $2.07 million and add around $40,000 to the normal cost. A $16,000 base, on the other hand, would raise costs by about $20,000, according to the Swampscott Contributory Retirement Board.
Finance Committee Chair Eric Hartmann said his board’s decision was done with the tight fiscal year budget in mind. While a COLA increase would not hit residents’ pockets for a few years to come, Hartmann expects there to be strict budgeting for the foreseeable future.
Hartmann added that the town has done a lot in recent years to invest into the community, and projects like the Hadley Hotel will generate revenue, but it’s unclear if funds will start coming in before the five year mark when the COLA increase would affect residents.
He did acknowledge, however, that if the retirement board does come back to ask for an additional raise at a later Town Meeting, he and his committee will reassess and see what is best for Swampscott at that moment.
“The longer you push out into the horizon, the more actual dollars you’re spending…The methodology (of the funding schedule) of six years is the reason why we want the hopefully $18,000,” said John Behen Sr., the vice chair of the Swampscott Contributory Retirement Board. “We believe this gives us the best advantage.”
