Purchasing Power Protection Allowance (PPPA)
Purchasing Power Protection Allowance (PPPA) is a benefit designed to maintain the original purchasing power of CalPERS retirees to a predetermined limit when accumulated Cost of Living Adjustment (COLA) has not maintained pace with inflation. For example, if your benefit stayed the same over a period of time but prices doubled, your purchasing power would only be 50% of its original value. The PPPA would bring your retirement benefit up to the predetermined limit thresholds, 75% (state and schools) or 80% (public agencies). The PPPA is part of the COLA 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 COLA.
Since PPPA is only paid when the gross benefit drops below the threshold, it can take several years of retirement to become eligible as your annual COLA benefit should help retain your purchasing power. PPPA is not guaranteed each year and it is possible that one year you could receive PPPA benefits but depending on the rate of inflation, PPPA benefits could be reduced or removed the next. If there is a net decrease to PPPA benefits or it has been removed, it is because your current COLA benefit is keeping your purchasing power at or above the threshold.
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 percentage
 Purchasing power threshold
 75 percent for state and school members
 80 percent for local and public agencies
 The year you retired and the base allowance at retirement. The base allowance is the allowance you received when you retired.
Retirees who have service with agencies that contract for 4 or 5 percent COLAs will generally not receive the PPPA benefit since the higher COLA percentage will keep them above the 75 or 80 percent purchasing power threshold.
How is PPPA Calculated
CalPERS uses the following process to calculate your PPPA amount:
 Step 1:

Calculates inflation factor, based on retirement year
 Current Year CPI / Retirement Year 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 2024 payable PPPA:
 Retirement year: 1983
 Employer: State agency or school
 COLA Percentage: 2%
 Purchasing power percent: 75
 COLA factor: 1.2080
 Base allowance at retirement: $1,000.00
 1983 CPI: 298.400
 2023 CPI: 912.751
Process  Calculation 

Step 1: Calculate the inflation factor 
Calculate the inflation factor for the benefit effective year by dividing the current year CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2023 calendar year inflation factor is 305.9 percent. 
Step 2: Calculate the new allowance after COLA has been applied 
Multiply the Base Allowance at Retirement by the COLA Factor to calculate the COLA amount.
The 2023 calendar year COLA is $1,208.00. We add these together to get the new allowance after the COLA has been applied.
The new allowance is $2,208.00. 
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 2022 calendar year PPPA threshold is $2,294.25. 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 2024 payable PPPA amount is $86.25. 
Example 2
The example will use the following data to calculate the 2024 payable PPPA:
 Retirement year: 1987
 Employer: State agency or school
 COLA Percentage: 2%
 Purchasing power percent: 75
 COLA factor: 1.0399
 Base allowance at retirement: $1,000.00
 1987 CPI: 340.400
 2023 CPI: 912.751
Process  Calculation 

Step 1: Calculate the inflation factor 
Calculate the inflation factor for the benefit effective year by dividing the current year CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2023 calendar year inflation factor is 268.1%. 
Step 2: Calculate the new allowance after COLA has been applied 
Multiply the Base Allowance at Retirement by the COLA Factor to calculate the COLA amount.
The 2023 calendar year 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 at Retirement by the Inflation factor from Step 1 and the threshold (75 percent) to obtain the PPPA threshold.
The 2023 calendar year PPPA threshold is $2,010.75. Determine if the new allowance meets the PPPA threshold.
Since the new allowance is greater than the PPPA threshold, PPPA is not payable. 
Public Agency
Example 1
The example will use the following data to calculate the 2024 payable PPPA:
 Retirement year: 1988
 Employer: Public agency
 COLA Percentage: 2%
 Purchasing power percent: 80
 COLA factor: 0.9999
 Base allowance at retirement: $1,000.00
 1988 CPI: 354.300
 2023 CPI: 912.751
Process  Calculation 

Step 1: Calculate the inflation factor 
Calculate the inflation factor for the benefit effective year by dividing the current year CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2023 calendar year inflation factor is 257.6% 
Step 2: Calculate the new allowance after COLA has been applied 
Multiply the Base Allowance at Retirement by the COLA Factor to calculate the COLA amount.
The 2023 calendar year COLA is $999.99. We add these together to get the new allowance after the COLA has been applied.
The new allowance is $1,999.90. 
Step 3: Determine if the allowance meets the PPPA threshold 
Multiply the Base allowance at Retirement by the Inflation factor from Step 1 and the threshold (80 percent) to obtain the PPPA threshold.
The 2023 calendar year PPPA threshold is $2,060.80. 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 2024 payable PPPA amount is $60.81. 
Example 2
The example will use the following data to calculate the 2024 payable PPPA:
 Retirement year: 1990
 Employer: Public agency
 COLA Percentage: 2%
 Purchasing power percent: 80
 COLA factor: 0.9222
 Base allowance at retirement: $1,000.00
 1990 CPI: 391.400
 2023 CPI: 912.751
Process  Calculation 

Step 1: Calculate the inflation factor 
Calculate the inflation factor for the benefit effective year by dividing the current year CPI by the retirement year CPI. This represents the maximum amount of inflation that has occurred since retirement.
The 2023 calendar year inflation factor is 233.20%. 
Step 2: Calculate the new allowance after COLA has been applied 
Multiply the Base Allowance at Retirement by the COLA Factor to calculate the COLA amount
The 2023 calendar year 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 at Retirement by the Inflation Factor from Step 1 and the threshold (80 percent) to obtain the PPPA threshold.
The 2023 calendar year PPPA threshold is $1,865.60. 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)