A Coral Gables advisory board wants to give retired employees a near 6 percent cost-of-living increase to their pension benefits, but city commissioners put the brakes on that plan Tuesday.

Under city rules, whenever the city’s pension fund earns more than 10 percent on its investments in a year, the pension board can recommend that some of the gain be dispensed to retirees as a “cost-of-living adjustment,” or COLA. Despite the name, however, this adjustment is not tied to the inflation rate, which is now about 2.2 percent. In effect, it’s a windfall for retirees if the pension fund has a good year.

But the rule does not take into account the overall health of the pension fund. While Coral Gables has enough money in the fund to pay current retirees, it is more than $200 million short of what it needs in the long term to provide promised benefits when current employees retire in the future.

Earlier this year, commissioners imposed higher pension contributions and reduced benefits on future police retirees after City Manager Pat Salerno and the police union were unable to reach a deal despite 18 months of negotiations. All officers’ annual pension contributions increased from 5 to 10 percent of wages.

And officers whose pension benefits had not yet vested — meaning officers with fewer than 10 years of service — will no longer be able to retire on 75 percent of their working pay after 25 years. Instead, they will get a maximum of 67.5 percent after 25 years.

On Tuesday, commissioners voted 3-2 to reject the Retirement Board’s request to provide a 6 percent cost of living increase for retirees in January. Commissioners Ralph Cabrera and Maria Anderson dissented. The Retirement Board oversees pension money for police officers, firefighters and other unionized workers.

City Attorney Craig Leen, and the city’s pension attorney, Jennifer Cowan, said that the city’s COLA rule conflicts with state law, and when that happens, state law prevails.

The pension board argued that since its return on assets for the budget year that ended Sept. 30 was 16.7 percent, a return that exceeds the threshold of 10 percent that triggers COLA increase, the city should pay the requested 5.95 percent boost. But state law says the city must come up with the money at the same time as it approves any such increase.

“State law prohibits transfers to future taxpayers any portion of cost to be paid by current tax payers,” Leen said. “The COLA is unfunded and, in my view, an additional benefit that is not funded should not shift to future taxpayers.”

The city’s actuary, Mike Tierney, confirmed that funding “needs to be in a plus position.”

According to the plan actuary, the Coral Gables Retirement Plan had a cumulative net actuarial loss of $82.8 million. The plan has an unfunded liability in excess of $200 million. If the city pays the requested cost of living increase that figure would amount to $1.6 million over 30 years — or $48 million.

Ron Cohen, an attorney representing the unions, argued that the cost-of-living increase was not an additional benefit.

“You’re supposed to fund it,” Cohen told the commission, citing the ordinance which calls for annual cost of living increases. “When the plan makes enough money on one factor then this COLA will be paid, it’s a trigger. To say it is additional because it hasn’t been prefunded is the tail wagging the dog.”