Benefits January 8, 2007

Alaska High Court Turns Down Non-Resident Retiree COLA Appeal

January 8, 2007 (PLANSPONSOR.com) - The Alaska Supreme Court has rebuffed an appeal by former state employees now living outside Alaska who claimed they deserved the same 10% cost-of-living adjustment (COLA) to their retirement benefits payments as in-state retirees receive.
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The Supreme Court ruling came in a 2003 lawsuit by three state retirement system participants who claimed their equal protection rights under the Alaska Constitution were violated when officials only granted the COLA payments to retirees living in Alaska.

Alaska gives the COLA to in-state members of the Public Employees’ Retirement System (PERS) and the Teachers’ Retirement System (TRS) as an incentive to stay within Alaska and in light of the state’s high cost of living.

“The purpose of the PERS and TRS COLA payments – encouraging retired public employees to remain in the state – is legitimate,” the justices wrote. “COLA payments are a means that is fairly and substantially related to that purpose. They do not substantially infringe on the right of member retirees to live elsewhere. Considering these determinations, we conclude that limiting COLA payments to resident retirees does not violate the equal protection clause of the Alaska Constitution”

Alaska Attorney General Talis Colberg, in a statement posted on his Web site, said the ruling effectively saves the state millions of dollars in unanticipated expenditures.

“If the non-resident plaintiffs had prevailed, the resulting cost in implementing such an outcome would have created an additional, unplanned burden to our state’s retirement system,” Colberg said in the statement.

The case is Public Employees’ Retirement System v. Gallant, Supreme Court Nos. S-11926/11945.

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