Paycheck Chronicles

3.6% COLA for Retirees in 2012

The final inflation figures for the 2011 fiscal year have been released, and the news is good for retirees who are hoping for a Cost of Living Adjustment in January 2012.  The 2012 COLA for military retirees will be 3.6% - a significant increase and most welcome after two years without a COLA.  The 3.6% adjustment will become effective 1 December 2011, and will be reflected in January 2012 retired pay, Survivor Benefit Plan, Veterans Administration, and Social Security payments.

There are two groups of military retirees who will not see the full 3.6% COLA applied to their current payments.  First are retired servicemembers who entered service on or after Aug. 1, 1986 and chose the REDUX retirement plan.  The REDUX plan gave a $30,000 Career Status Bonus at 15 years of service.  In return for the bonus, those servicemembers agreed to accept reduced retired pay and also a reduced COLA.  REDUX retirees’ COLAs are calculated at 1% below the normal COLA rate, so they’ll see a 2.6% COLA.

The second group who will not see the full 3.6% COLA are those servicemembers who retired in 2011.  They will receive a smaller COLA for just this one year, as they already benefited from the active duty pay in January 2011.  All future COLAs will be the same as everyone else.

I know that there are many people who are going to be very, very happy about this.


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