The retired pay computed under each retired pay plan is adjusted each
year, effective December 1st, by the change in consumer prices. The COLA
is determined by the percentage increase, if any, between the average
3rd quarter Consumer Price Index (CPI) of the current year over the
average 3rd quarter (CPI) of the prior year. In the event of a decrease
in the CPI, the COLA will not be negative, but will be zero.
Additionally, the COLA for the next year will reach back to the 3rd
quarter CPI to the last year in which there was a positive COLA
If the percent determined above is greater than 1 percent, the COLA
for REDUX retirements will be reduced by 1 percent. If the percent
determined above is 1 percent or less, the COLA for the REDUX retirement
plan will be the same as for all other retirement plans.
The first COLA adjustment after retirement is calculated under a
formula different than that above, if the member retires between January
1st and September 31st. This is to preclude the advantage of receiving
a retirement based on both a new pay raise and full COLA in the first
year of retirement. The amount of this first "partial COLA" is
calculated differently for the Final Pay and High-36 retirement plans.
The partial COLA for REDUX plan retirees is based on the High-36, with a
further prorated deduction. The first partial COLA under the
Disability retirement plan is the same as for the Final Pay retirement
Note that the COLA for retired pay is calculated differently than the
increase to active duty pay. Thus, retirement pay COLAs and annual
active duty pay raises will differ
al active duty pay raises will differ.