It’s official: the 2014 cost-of-living adjustment (COLA) for military retired pay, SBP annuities, Social Security checks, and VA disability and survivor benefits will be 1.7 percent, effective December 1, 2014. It will first appear in the January checks, paid on December 31. The Consumer Price Index increased 0.1 percent in September to 234.170.
The 1.7 percent 2014 COLA represents a slight increase over last year’s 1.5 percent increase.
However, two categories of military retirees won’t receive a 1.7 percent COLA in 2014.
2014 Retirees: Some servicemembers who retired during calendar year 2014 will receive a somewhat smaller, partial COLA for this year only, because they weren’t in retired status for the full year. Their partial COLAs generally reflect the amount of inflation experienced in the calendar quarters since they retired:
• Jan. - Mar. retirees – 1.7 percent
• Apr. - Jun. retirees – 1.3 percent
• Jul. - Sept. retirees – 0.1 percent
• After Oct. 1, 2014 – no COLA this year.
All members who retired during 2014 will receive full-year COLAs in future years.
REDUX Retirees: Servicemembers who entered service on or after Aug. 1, 1986 and who elected to accept a $30,000 career retention bonus at the 15-years-of-service point agreed to accept reduced retired pay and COLAs as a trade-off for the bonus. REDUX retirees’ COLAs are depressed 1 percent below the normal COLA rate, so they’ll see a 0.7 percent COLA this year.
Retired pay and active duty pay increases are different in most years because they are based on different compensation principles.
Government retired pay promises must be kept, including annual cost-of-living adjustments (COLA) to prevent erosion of retirees' purchasing power by inflation.