Military retirees receive cost-of-living adjustments or COLAs. Servicemembers still serving receive annual pay increases. Let’s look at the differences.
The law on Retiree COLAs is found in Title 10 U.S. Code § 1401a, Adjustment of retired pay and retainer pay to reflect changes in Consumer Price Index.1 Each year on 1 December, the Secretary of Defense (SECDEF) determines the amount of the COLA, if any, for retirees. The increase is determined using the Consumer Price Index for Urban Wage Earners and Clerical Worker-U.S. City Average, commonly referred to as the CPI-W. The COLA authorized by SECDEF is effective 1 December and first reflects in military retired pay received on or about 1 Jan of the next year.
The law on Servicemember pay increases is found in Title 37 U.S. Code § 1009, Adjustments of monthly basic pay.2 The first element in determining the pay increase is the Employment Cost Index or ECI (wages and salaries, private industry workers). The next element is the President’s recommended alternate pay increase transmitted to Congress 1 September of the year prior to the next year’s pay increase. Factors bearing on the President’s recommendation include a national emergency and serious economic conditions. Last, the President’s recommended alternate pay increase may consider its effect on recruiting and retention. The pay increase is included in the federal budget passed by Congress. The pay increase first reflects in military pay received 15 January.
This is a general discussion of the subject matter. For a more detailed understanding, please read the references noted below.
Author Jim Cramp is a retired active duty colonel and principal attorney at the Cramp Law Firm, PLLC. The firm specializes in Federal Civil Service and Military Divorce matters, as well as other family law matters that affect Federal Civil Service and Military families.
Note1: Title 10 U.S. Code § 1401a, Adjustment of retired pay and retainer pay to reflect changes in Consumer Price Index
Note2: Title 37 U.S. Code § 1009, Adjustments of monthly basic pay.