washington scene LEGISLATIVE NEWS THAT AFFECTS YOU
COLA Cut
Congress passes a two-year budget deal in an unexpected end-of-year agreement. The deal includes a provision that will reduce annual COLAs for working-age retirees.
On Dec. 18, 2013, the Senate passed the Bipartisan Budget Act of 2013 (BBA) by a vote of 64-36. The two-year budget deal crafted by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) — chairs of the House and Senate Budget committees — includes a REDUX-like provision that will reduce working-age retirees’ annual COLAs by 1 percentage point until they reach age 62. The retirement change fails to grandfather existing retirees and currently serving members who plan to serve a 20-plus year career.
Because of the fast-track nature of the bill, many members of Congress were caught off-guard by the overall financial impact retirees would face.
Servicemembers who retire at the 20-year point will feel the full negative financial impact of the provision by experiencing a near 20-percent reduction in their retired pay by the time they reach age 62.
For example, an E-7 retiring this year with 20 years of service would see an average loss of more than $3,700 a year by the time he or she reaches age 62. The overall impact: $83,000 lost by age 62.
Though the bill includes a COLA “catch-up” clause at age 62 that recalculates the follow-on retiree’s annual pay base, the financial loss of the years between retirement and age 62 is permanently lost.
From the outset, the architects of the BBA insisted the COLA adjustment would exempt disability retirees. After MOAA’s review of the language, we discovered it contains no exemption for Chapter 61 retired pay or for certain survivors’ benefits.
Survivors of retirees under age 62 will see a reduced annuity; however, when their retiree would have reached age 62, the survivor’s annuity will be recalculated to the full annual COLA.
The budget passed the House and Senate within days of introduction. MOAA mobilized to voice our concern, organizing a Storming the Hill event with our partners in The Military Coalition and the American Legion. Hill-stormers visited every senate office Dec. 16, urging them to strip the harmful provision.
MOAA President Vice Adm. Norbert R. Ryan Jr., USN (Ret), spoke at a Dec. 17 press conference with Sens. Kelly Ayotte (R-N.H.), Lindsey Graham (R-S.C.), and Roger Wicker (R-Miss.) to explain the disastrous consequences of the retirement provision. Ryan stressed MOAA did not want to prevent a bipartisan budget agreement but implored the Senate to find alternative funding to avoid disproportional cuts on the backs of military retirees.
The BBA passed despite many legislators objecting to the military retirement reform provision.
Other budget-saving measures in the agreement include a provision altering retirement contribution amounts for federal retirees. However, these apply only prospectively to new hires, grandfathering current employees into their retirement system. Military retirees were not afforded this protection.
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Mail Your Letters
Sign, stamp, and mail the letters between pages 40 and 41 urging congressional leadership not to devalue the premiums of service and sacrifice already paid by career servicemembers and those grievously injured.
FEBRUARY 2014 MILITARY OFFICER 35
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