Every year, most federal payments are adjusted by an increase called a Cost of Living Adjustment (COLA). This amount is calculated based upon statistics called the Consumer Price Index (CPI). These statistics are compiled by the Bureau of Labor Statistics and include the costs of various goods and services.
The 2015 COLA for military retired pay, Survivor Benefit Plan (SBP) annuities, Social Security benefits, and Department of Veterans Affairs (VA) disability and survivor benefits will be 1.7%. This change will be effective 1 December 2014 and it will first appear in the January 2015 payments, which will be paid on 31 December 2014, because 1 January 2015 is a federal holiday.
There are two groups of retired military members who will not receive the full 1.7% increase: members who retired in 2014, and servicemembers who selected the Career Status Bonus (CSB)/Redux retirement plan.
2014 RetireesRetirees who retired in 2014 will receive a pro-rated COLA based upon the amount of inflation experienced in the calendar quarters since they retired. Those who retired in the first quarter of the year (January, February, or March 2014)will receive the full 1.7% COLA, and those who retire in the last quarter of the year (October, November, and December 2014) will receive no COLA adjustment. Those who retired in the second quarter of the year (April, May, or June 2014) and the third quarter of the year (July, August, or September 2014) will receive pro-rated COLAs; the amounts have not yet been announced.
All members who retired during 2014 will receive full-year COLAs in future years.
CSB/Redux RetireesRetirees who chose the CSB/Redux retirement plan agreed to accept reduced COLAs in exchange for the Career Status Bonus received while serving. Redux retirees’ COLAs are 1% less than the regular COLA rate, so they’ll see a 0.4% COLA in their January 2015 paychecks.
While not a huge increase, this COLA is more than the 2014 COLA of 1.5%. Hopefully, this small amount will provide some relief from the ever-rising prices of things!