Cutting Your COLA: How ‘Chained CPI’ Would Reduce Your Military Retirement Benefit

Cutting Your COLA: How ‘Chained CPI’ Would Reduce Your Military Retirement Benefit
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A Congressional Budget Office (CBO) proposal to cut the federal deficit by more than $250 billion over 10 years would remove that money from the pockets of federal beneficiaries, including military retirees, VA disability pension holders, and Social Security recipients.


The plan, outlined in the CBO’s regular report to the new Congress, appears simple on its surface: By indexing the annual cost-of-living increase (COLA) received by military retirees and others to a different set of figures, the government would save $256.5 billion over 10 years. The new metric – known as “Chained CPI,” a variant of the Consumer Price Index – “has grown by an average of about 0.25 percentage points more slowly per year than the traditional CPI measures,” per the CBO report.


It's not a new plan – MOAA voiced opposition to a change in 2018, for instance – and it hasn’t gotten any better with age. Switching from the current CPI-W (the figure tracked in MOAA’s COLA Watch) to a chained CPI would chip away at the military retirement benefit over time, with older retirees seeing compounded effects after decades of smaller checks. Even worse, the chained system may not reflect cost-of-living increases felt by the elderly population, adding to the problem of the lower baseline increases.





MOAA is no stranger to the COLA fight. We helped defeat a planned COLA reduction in 2013 by breaking down the true costs of these “savings” proposals for legislators, ensuring they could see the damage they could do to the military retirement benefit and the financial security of those who served and their families.


Like other CBO proposals in this biennial report – including those involving additional (and significant) TRICARE For Life costs – the plan to cut COLA benefits has not taken shape in legislation. But as budget pressures mount, lawmakers may need to find savings in untapped places; MOAA will work to protect your earned benefits from such practices, and to keep you informed if any of these proposals move past the drawing board.


Keep up with the latest news on this and other issues critical to your benefits and the health of the all-volunteer force via MOAA’s Advocacy News page. And if you haven’t already, register at MOAA’s Legislative Action Center so you can take part in our advocacy efforts with the 118th Congress and beyond.


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About the Author

Kevin Lilley
Kevin Lilley

Lilley serves as MOAA's digital content manager. His duties include producing, editing, and managing content for a variety of platforms, with a concentration on The MOAA Newsletter and Follow him on X: @KRLilley