Purchasing Power Protection Allowance (PPPA)
Purchasing Power Protection Allowance (PPPA) is a benefit designed to restore the original purchasing power of CalPERS retirees to a predetermined limit. The PPPA is part of the Cost of Living section of law and is governed by 21337 and 21337.1.
Under the retirement law, retirees may receive an annual PPPA paid in the May 1 warrant each year. PPPA is only payable if a benefit falls below the minimum threshold of the rate of inflation, and it is made after the costofliving adjustment (COLA).
PPPA is calculated for each service type, and is dependent on four factors:
 Consumer Price Index for All Urban Consumers (CPI, 1967), published by the Bureau of Labor Statistics (BLS).
 COLA factor, determined by CPI and your employer contracted COLA Provision
 Purchasing power threshold
 75 percent for state and school members
 80 percent for local and public agencies
 The year you retired
How is PPPA Calculated
CalPERS uses the following process to calculate your PPPA amount:
 Step 1

Calculates inflation factor, based on retirement year
 Current CPI / Retirement CPI = Inflation Factor
 Step 2

Calculates the new allowance after COLA has been applied
 Step 3

Determines if the new allowance meets the minimum threshold
 Base Allowance x Inflation Factor x Threshold % = PPPA Threshold
 If the allowance is less than the minimum threshold, PPPA is payable.
 If the allowance is greater than or equal to the minimum threshold, no PPPA is payable.
 Base Allowance x Inflation Factor x Threshold % = PPPA Threshold
 Step 4

Calculates the amount of PPPA payable, if applicable
 PPPA Threshold – (base + COLA) = PPPA
PPPA Calculation Examples
State Agency or School
Example 1
The example will use the following data to calculate the 2018 payable PPPA:
 Retirement year: 1980
 Employer: State agency or school
 Purchasing power percent: 75
 COLA factor: 1.0807
 Base allowance: $1,000.00
 1980 CPI: 246.80
 2017 CPI: 734.269
Process  Calculation 

Step 1: Calculate the inflation factor. 
Calculate the inflation factor for the benefit effective year by dividing the current CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2018 inflation factor is 297.51 percent. 
Step 2: Calculate the new allowance after COLA has been applied. 
Multiply the Base Allowance by the COLA Factor to calculate the COLA amount.
The 2018 COLA is $1,080.70. We add these together to get the new allowance after the COLA has been applied.
The new allowance is $2,080.70. 
Step 3: Determine if the new allowance meets the PPPA threshold. 
Multiply the base allowance by the inflation factor from Step 1 and the threshold (75 percent) to obtain the PPPA threshold.
The 2018 PPPA threshold is $2,231.33. Determine if the new allowance meets the PPPA threshold.
Since the new allowance is less than the PPPA threshold, PPPA is payable. 
Step 4: Calculate the amount of PPPA payable. 
Calculate the PPPA amount by subtracting the new allowance from the PPPA threshold.
The 2018 payable PPPA amount is $150.63. 
Example 2
The example will use the following data to calculate the 2018 payable PPPA:
 Retirement year: 1981
 Employer: State agency or school
 Purchasing power percent: 75
 COLA factor: 1.0399
 Base allowance: $1,000.00
 1981 CPI: 272.40
 2017 CPI: 734.269
Process  Calculation 

Step 1: Calculate the inflation factor. 
Calculate the inflation factor for the benefit effective year by dividing the current CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2018 inflation factor is 269.56 percent. 
Step 2: Calculate the new allowance after COLA has been applied. 
Multiply the Base Allowance by the COLA Factor to calculate the COLA amount.
The 2018 COLA is $1,039.90. We add these together to get the new allowance after the COLA has been applied.
The new allowance is $2,039.90. 
Step 3: Determine if the new allowance meets the PPPA threshold. 
Multiply the base allowance by the inflation factor from Step 1 and the threshold (75 percent) to obtain the PPPA threshold.
The 2018 PPPA threshold is $2,021.70. Determine if the new allowance meets the PPPA threshold.
Since the new allowance is greater than the threshold, PPPA is not payable. 
Public Agency
Example 1
The example will use the following data to calculate the 2018 payable PPPA:
 Retirement year: 1983
 Employer: Public agency
 Purchasing power percent: 80
 COLA factor: .9607
 Base allowance: $1,000.00
 1983 CPI: 298.40
 2017 CPI: 734.269
Process  Calculation 

Step 1: Calculate the inflation factor. 
Calculate the inflation factor for the benefit effective year by dividing the current CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2018 inflation factor is 246.07 percent. 
Step 2: Calculate the new allowance after COLA has been applied. 
Multiply the Base Allowance by the COLA Factor to calculate the COLA amount.
The 2018 COLA is $960.70. We add these together to get the new allowance after the COLA has been applied.
The new allowance is $1,960.70. 
Step 3: Determine if the allowance meets the PPPA threshold. 
Multiply the base allowance by the inflation factor from Step 1 and the threshold (80 percent) to obtain the PPPA threshold.
The 2018 PPPA threshold is $1,968.56. Determine if the new allowance meets the PPPA threshold.
Since the new allowance is less than the PPPA threshold, PPPA is payable. 
Step 4: Calculate the amount of PPPA payable. 
Calculate the PPPA amount by subtracting the new allowance from the PPPA threshold.
The 2018 payable PPPA amount is $7.86. 
Example 2
The example will use the following data to calculate the 2018 payable PPPA:
 Retirement year: 1984
 Employer: Public agency
 Purchasing power percent: 80
 COLA factor: .9222
 Base allowance: $1,000.00
 1984 CPI: 311.10
 2017 CPI: 734.269
Process  Calculation 

Step 1: Calculate the inflation factor. 
Calculate the inflation factor for the benefit effective year by dividing the current CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2018 inflation factor is 236.02 percent. 
Step 2: Calculate the new allowance after COLA has been applied. 
Multiply the Base Allowance by the COLA Factor to calculate the COLA amount
The 2018 COLA is $922.20. We add these together to get the new allowance after the COLA has been applied.
The new allowance is $1,922.20. 
Step 3: Determine if the new allowance meets the PPPA threshold. 
Multiply the base allowance by the inflation factor from Step 1 and the threshold (80 percent) to obtain the PPPA threshold.
The PPPA threshold is $1,888.16. Determine if the new allowance meets the PPPA threshold.
Since the new allowance is greater than the threshold, PPPA is not payable. 
If you have any questions, contact us at 888CalPERS (or 8882257377).
Cost of Living
 CostofLiving Adjustment (COLA)
 Purchasing Power Protection Allowance (PPPA)