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Hill report puts dollar figures on military retiree COLA limit

(Paula Bronstein/Getty) (Paula Bronstein/Getty)

The average military enlisted person retiring in the future would lose $69,000 in lifetime benefits and the average future retired officer would lose $87,000 if a recently enacted limit on military retiree payments is left in place, according to a new analysis done for Congress.

The Senate has scheduled a preliminary vote this evening to take up a bill to restore full cost of living adjustments, or COLAs, to all military retirees under age 62.

Under a provision of the December budget deal included in a follow-up law enacted in January, military retirees under 62 are to receive COLAs of 1 percentage point below the Consumer Price Index used to increase their retirement benefits. On turning 62, the payments would be raised to the level they would have reached with full inflation adjustments, but there would be no catch-up for the years at reduced levels.

The reduction would not apply to those who were retired due to disability, to survivor beneficiaries, nor to those already 62 or older as of the effective date in December 2015.

The Congressional Research Service, in a report dated last Friday, said that keeping the reduction in place would leave the average future enlisted retiree with $1.67 million in lifetime retired payments rather than $1.73 million, and the average retired officer with $3.74 million rather than $3.83 million, it said.

The average age at retirement for is 45.2 for officers and 41.4 for enlisted personnel, it said.

CRS said the COLA limit would affect about 750,000 of the 1.94 million retired from the military as of 2012 but for them, the impact would be less because the reduction would apply for fewer years; the average age  is 61 for current enlisted retirees and for officers, it’s 66. On average, lifetime retirement benefits for current retirees are about $590,000 for the former category and $1.37 million for the latter, it said.

The bill on the Senate floor is one of many measures offered by representatives and senators of both parties to repeal the COLA change, some of which propose offsetting savings elsewhere. The pending bill, however, does not specify offsetting savings.

“In order to clear both chambers any proposal will likely require a bipartisan offset,” the Military Officers Association of America said on its Web site Friday.

Repeal language also is in a wide-ranging veterans benefits bill that could reach a Senate vote soon, and House leaders have floated the idea of including repeal language in a bill to raise the federal debt ceiling.

CRS does not take positions on legislation but summarized the arguments for and against repeal in this way: “Those calling for a reversal argue that retaining the full COLA adjustment is part of a commitment to service members to preserve benefits including future COLAs at the full CPI to offset inflation. . . . Those defending the COLA adjustments argue that the effect on most retirees would be small compared to their lifetime benefits. They also argue that the change would help restrain the growth in military compensation over the past decade.”

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