Congress Punts on Reducing Retiree COLA Pay

A move to reduce retirement pay increases for future career service members by 1 percent lower will not go into effect for another year under the 2015 defense budget agreed to by the Senate and House armed services committees.

The provision, which is targeted toward working-age retirees -- those under 62 -- has been criticized by military associations and veterans groups since it was first proposed in 2013 as a way to rein in spending. 

Delaying the start of the COLA-minus-one plan until Jan. 1, 2016, means anyone entering the military over the next year and remaining in for a full career will be exempt from the provision.

The National Defense Authorization Act still must be voted on House and Senate, which is scheduled to occur before Christmas.

The agreed-to budget also includes higher co-pays for prescriptions filled at off-base pharmacies, a curb on basic allowances for housing, or BAH, by 1 percent next year, and reducing the statutory 1.8 percent troop pay raise next year to 1 percent.

Jonathan Withington, a spokesman for the Military Officers Association of America, said on Wednesday that the delay on implementing the COLA-minus-one plan will give lawmakers time to debate the plan with the benefit of the Military Compensation and Retirement Modernization Commission report.

The nine-member commission, which was established in January 2013, has been holding briefing sessions with subject matter experts and town hall gatherings of service members, veterans and retirees across the country. Its report is scheduled to be turned over to President Obama in February 2015.

"No changes should be made to personnel pay and benefits until the [commission] has made its report," said John Stovall, director of The American Legion’s national security and foreign relations division.

The Pentagon, which has been trying to cut its personnel costs, backed the reduced COLA for working-age retirees.

Rep. Paul Ryan, R-Wisconsin, cited Pentagon figures showing that in 2013 the cost of military retirement and health care exceeded that spent on military procurement -- $143 billion compared to $110 billion.

Advocates of the provision also said that at age 62 -- the age at which workers may begin retiring and drawing Social Security benefits -- military retirees would begin getting the same annual cost-of-living adjustment as everyone else. Also, their monthly checks would be adjusted upward to reflect the amount they would be getting then had their COLA not been 1 percent lower during the interim years.

Still, veterans' groups argued that the minus-1 plan would cost a typical retiree about $80,000 over time.

MOAA last month compared the current efforts to cut military personnel spending with a decade’s worth of progress Congress made in improving pay and benefits for troops.

"Congress eliminated a 13.5 percent military pay gap with the private sector and zeroed-out the 18 percent out-of-pocket housing costs that led to serious retention problems in the late 1990s," MOAA said in a statement.

But the continued efforts to slow or reduce personnel spending threatens to "reverse much of the hard work of Congress has made between 2000 and 2010," MOAA said.

-- Bryant Jordan can be reached at bryant.jordan@military.com.