Boston’s latest budget fight is coming down to a very specific number: $18,000.
The City Council voted 11-0 on Wednesday to urge the Boston Retirement Board to boost municipal pensions by raising the cost-of-living adjustment, or COLA, base from $15,000 to $18,000 and to approve a 3% annual COLA. The resolution, filed by Councilor Ed Flynn and co-sponsored by Councilor Julia Mejia, would increase the typical yearly COLA for eligible retirees from $450 to $540, an extra $90 a year. Supporters on the council cast the move as targeted relief for retirees living on fixed incomes, according to the Boston Herald.
What the resolution would do
On paper, the council’s ask is simple. The Retirement Board would keep the COLA at 3%, which is the legal cap, but apply that percentage to a larger slice of each qualifying pension. Instead of calculating the annual increase on the first $15,000 of pension income, the city would use $18,000. That change is what bumps the typical annual COLA from $450 to $540.
Backers argue that for retirees squeezed by rising prices, the extra $90 a year can matter at the margins, especially for those with smaller pensions. The Wu administration, however, has been warning that even small annual boosts come with long-term costs for the city’s already strained retirement system, as described by the Boston Herald.
Mayor's budget squeeze
The pension debate is unfolding while Mayor Michelle Wu is already trying to plug a financial hole. Her proposed budget for the next fiscal year comes in at $4.9 billion, and she has asked the council for permission to tap roughly $70 million from city reserves to close a gap. The administration has pointed to rising health care expenses and higher snow removal costs as key drivers of the shortfall, according to WBUR.
Every new long-term obligation now gets scrutinized against that backdrop, which is part of why a relatively small benefit bump for retirees has turned into a much bigger policy argument.
Cost and the city's liability
City financial officials and outside analysts warn that lifting the COLA base to $18,000 would add about $90 million to Boston’s unfunded pension liability. Critics of the increase have seized on that figure, arguing that the city cannot afford to expand benefits while it is still trying to dig out of a sizable pension hole.
Advocates counter that the benefit at stake for individual retirees is modest, roughly $90 more a year, and say it is aimed at preventing hardship among people who already built their financial plans around city pensions. Officials on the fiscal side respond that the move would slow Boston’s timeline for closing its pension gap, according to reporting from The Boston Globe.
What happens next
The Boston Retirement Board, not the council, has the legal authority to set the COLA base. The board is scheduled to take up the issue on June 18, according to its calendar on the City of Boston website, listed under the Boston Retirement Board.
Under state rules, local Retirement Boards need to notify the Public Employee Retirement Administration Commission, known as PERAC, of their COLA decisions before the end of the fiscal year. That timing requirement is laid out in guidance from Mass.gov, which means Boston’s board is on a clock if it wants any change to apply for the coming year.
Councilors and retirees push back
Flynn has argued that retirees have not seen a COLA base hike since 2021 and that the current $450 annual adjustment is simply not enough for many residents living on fixed incomes. Mejia has framed the proposed increase as especially important for low-income retirees, according to the Boston Herald.
Retiree advocates and union leaders have echoed those concerns in meetings with board members and in public testimony, arguing that the city should prioritize people who spent their careers working for Boston over the abstract goal of an earlier end date for the pension shortfall.
The math and what it means
Under state law, local retirement systems in Massachusetts can provide COLAs of up to 3%, which puts Boston’s proposal at the maximum allowed percentage. That ceiling is similar to the federal Social Security cost-of-living adjustment of 2.8% announced for 2026 by the Social Security Administration.
The real fight is over which part of a pension check gets that 3%. Right now, Boston applies it only to the first $15,000 of annual pension income, a limit that is listed on the local options page at Mass.gov. The council wants that base raised to $18,000, which would turn the same 3% cap into a slightly higher dollar amount for retirees, and into a significantly larger long-term liability for the city.
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