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Overseas COLA levels to drop

Posted 9/30/2011   Updated 10/5/2011 Email story   Print story


U.S. Air Forces in Europe Public Affairs

9/30/2011 - RAMSTEIN AIR BASE, Germany  -- Beginning Oct. 1, American service members and their families living overseas will see a reduction in their Cost of Living Allowance.

The extent of the reduction depends on the member's rank, years of service, number of dependents and duty location. For example, for service members stationed at Ramstein, the payment for an O-4 with three dependents will decrease approximately $54 monthly and for an E-6 with three dependents, about $10 per month. This is on top of reductions, which are occurring due to the strengthening dollar.

The purpose of overseas COLA is to ensure that service members have the same purchasing power at overseas duty locations as in the United States. According to the most recent Bureau of Labor Statistics Consumer Expenditure Survey for military members, the typical member bought less expensive goods and services, such as a used instead of new car, and spent more disposable income on non-COLA items, which left less money to purchase COLA type goods and services. This assessment led to COLA rates being adjusted downward.

To maintain purchasing power, the Per Diem Committee in Washington, D.C., adjusts the COLA baseline annually depending on where service members shop and the prices of goods and services they buy as determined by the annual Overseas Housing Allowance surveys.

COLA is also adjusted as often as every two weeks based on fluctuation of the local currency relative to the U.S. dollar. As the U.S. dollar gets stronger, service members stationed in overseas locations can expect COLA payments to decrease.

Since COLA is not a fixed amount and can fluctuate from pay period to pay period, Defense Department officials continually stress that fixed expenses such as rent and car payments should be based on what a service member can afford without COLA.

Airmen can see what the actual amounts they will receive by using the COLA calculator at: www.defensetravel.dod.mil/site/colaCalc.cfm. For more information on overseas COLA, visit the Per Diem Committee Web site at: www.defensetravel.dod.mil/perdiem/allowcol.html.

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