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COLA vs. Pay Raise Why the difference?


I


n contrast to the 3.6-percent retiree COLA for 2012, currently serving per- sonnel are scheduled for a 1.6-percent


pay raise in January. One question that often is asked when active duty pay raises or retiree pay raises (COLAs) are announced is why is there a difference between the two? Active duty (and Guard/Reserve)


pay raises are tied to private-sector pay growth in order to maintain pay compa- rability standards. Because private-sector pay raises have


been relatively small the past few years, currently serving members got a 1.4-per- cent raise January 2011 and will receive a 1.6-percent raise January 2012. Retiree COLAs, on the other hand,


aren’t “pay raises” but are meant to sustain the same purchasing power of retired pay from year to year and are tied to inflation (as measured by the CPI). Because consumer prices dropped pretty


steeply three years ago, retirees haven’t seen any COLA for the past two years. Now that prices finally have risen back


above where they were three years ago, re- tirees will see a 3.6-percent COLA. Because they are tied to different


things, currently serving pay raises and re- tiree COLAs are rarely the same number. Here’s a sample of the past six years: 2007: 2.7-percent pay raise versus


3.3-percent COLA 2008: 3.5-percent pay raise versus


2.3-percent COLA 2009: 3.9-percent pay raise versus


5.8-percent COLA (the largest COLA in 27 years) 2010: 3.4-percent pay raise versus zero


COLA 34 MILITARY OFFICER DECEMBER 2011 2011: 1.4-percent pay raise versus zero


COLA (smallest military pay raise in al- most 50 years) 2012: 1.6-percent pay raise versus


3.6-percent COLA As you can see, the amounts vary con-


siderably from year to year. The side that gets less always has a gripe, but wait until next year, and the shoe might be on the other foot.


MOAA Challenges The


A


New York Times Vice Adm. Norb Ryan Jr., USN- Ret., blasts editorial.


Sept. 27 editorial in The New York Times (“The Pentagon Bud- get and the Deficit”) blamed mili-


tary personnel programs for the growth in the defense budget over the past decade. On Sept. 30, the Times published a letter to the editor by MOAA President Vice Adm. Norb Ryan Jr., USN-Ret., rebutting the edi- torial in the Times. His full letter read: The Sept. 27 editorial ‘The Pentagon


Budget and the Deficit’ ignored that mili- tary compensation costs rose over the last decade because America spent the previous two decades whacking military pay, retire- ment, and health care. When those cuts undermined retention and readiness in the ’90s, Congress had to fix them. Most Americans understand it takes powerful incentives to induce top people to serve decades under conditions like those of the last 10 years. That great military benefit deal is avail-


able to any who meet the entry standards and pay the necessary up-front premium of decades of service and sacrifice. Strangely, few are willing.


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