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DoD COLA policy may mean pay cuts for some troops
Overseas troops may soon face pay cuts as the Department of Defense calculates their cost of living adjustments (COLA).
From June onwards, most overseas military personnel are likely to experience a decrease in their take-home pay as the department reverts to its previous policy of letting COLA rates decrease as they would have. The new policy will affect service members stationed outside the continental US, with half of the decrease taking effect in their June 1 paychecks and the other half with their December 1 payments. While the exact amounts of the decreases are yet to be determined, officials have warned that they will be significant.
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The issue centers around the overseas COLAs the Pentagon uses to ensure members stationed outside of the continental US are compensated fairly. The Pentagon uses the COLA rates to make sure that individuals stationed in places like Hawaii or Germany have the same purchasing power for day-to-day needs as their stateside peers at the same rank.
Last year, the DoD set a floor for all its overseas COLAs due to inflation concerns. The floor ensured that the department did not let any local adjustment rates fall any further than they had in 2022. However, under the new policy, which takes effect starting with the May 15 pay period, the DoD will allow the COLA rates to decrease as they otherwise would have.
DoD officials have suggested that the overseas COLA rates will decline for almost everyone compared to what they are now receiving. The department had not updated its COLA tables to reflect the new policy making it impossible to determine how significant the decreases will be, depending on rank and locality. However, the Pentagon is emphasizing different metrics that it says will offset whatever decreases it ultimately publishes.
Since all military members received a 4.6% increase in their basic pay and an average 11.2% increase in their basic allowances for subsistence, most military members still will be receiving larger paychecks than they would have at the same time last year, officials argue.
Under the new policy, combatant commanders who oversee each geographic portion of the DoD's global footprint have a new avenue to appeal DoD's determinations about how large the overseas COLAs should be. They will have 45 days to let the Pentagon know that they believe its survey data on local costs is incorrect. If approved, the Pentagon will authorize new data collections almost immediately.
DoD's determinations on how large the overseas COLAs should be are based on two separate data sources. The "Living Pattern Survey" tries to estimate how much of an average military member's paycheck goes toward different types of shopping. The other data source is the "Retail Price Schedule," which the department uses to track how much specific items cost at specific locations.
Despite the new COLA policy potentially leading to a decrease in the take-home pay of overseas military personnel, the DoD has emphasized the strength of regular military compensation and the availability of programs to support service members in need. While the new policy may cause some financial strain for military personnel stationed abroad, the DoD is working to ensure that they are still fairly compensated and supported in their service to the country.
