COLAs and Military Retired Pay 2005 in the works

Since 08-17-04

From: Waspscpo@aol.com [mailto:Waspscpo@aol.com ]
Sent: Sunday, August 15, 2004 7:27 PM
To: undisclosed-recipients:
Subject: COLAs and Military Retired Pay

The 2005 COLA increase has not been announced yet.

COLAs and Military Retired Pay

July 2004

Issue: Government retired pay promises must be kept, including annual cost-of-living adjustments (COLAs) to prevent erosion of retirees' purchasing power by inflation.

Background:

Despite previous prospective changes that reduced future retired pay value by 25 percent since 1980, and subsequent retention problems that led Congress to restore part of that lost value in 1999, some government and private sector critics continue to allege the military retirement system is "overly generous." During the 1990’s, legislators proposed or enacted multiple changes or delays in annual cost-of-living adjustments (COLAs), singling out retired servicemembers for discriminatory COLA penalties. Too often, critics wrongly equate federal retirement compensation—earned by decades of selfless service and sacrifice—with unearned federal welfare programs.

Civilian retirement standards don't apply to the military, which entails far more arduous service conditions: 20 to 30 years of hazardous duty, frequent moves, extended family separations, overseas service, long hours of overtime without extra pay, forfeiture of many personal freedoms most civilians take for granted, and an "up-or-out" promotion system. Nearly all military members face forced departure from service before age 50, with no vesting before 20 years. Retaining a high-quality career force over the long term requires a reciprocal commitment between member and service.

Retired pay increases, provided for in statute since 1871, are part of the commitment. Since 1963, COLAs have been tied to the Consumer Price Index. Without COLA protection, inflation would erode nearly half of real retired pay value for a 20-year retiree by age 62. 

MOAA Position: MOAA is committed to resisting any attempts to single out uniformed services retirees for special COLA penalties.

Key Bills/Status: No bills on the horizon at this time; the most likely potential vehicles for future COLA threats are Social Security reform proposals that would limit COLAs as a means of reducing long-term costs. The 2004 COLA was 2.1 percent for military and federal retired pay, VA disability compensation, SBP survivor annuities, Social Security, and other federal annuity programs. Based on information measured so far this year, the 2005 COLA should be in the 3.0% range. (See FY 2005 NDAA Matrix)
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Contributed,
YNCS Don Harribine, USN(Ret)

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