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Next December's COLA increase estimated at 0.1%

Mar. 16, 2010 - 03:28PM   |  
By RICK MAZE   |   Comments
Andrew Pike, an Army veteran who was shot and paralyzed in the Iraq war, watches his new service dog Yazmin pull a door open. After getting no COLA in military and federal civilian retired pay, veterans' disability compensation and Social Security last December because of the weak national economy, congressional economists are estimating the Dec. 1, 2010, pay adjustment is going to be 0.1 percent. (Getty Images)

The 2010 cost-of-living adjustment for retirees could test the idea of whether something really is better than nothing.

After getting no COLA in military and federal civilian retired pay, veterans' disability compensation and Social Security last December because of the weak national economy, congressional economists are estimating the Dec. 1, 2010, pay adjustment is going to be 0.1 percent.

That COLA forecast was issued March 12 by the non-partisan Congressional Budget Office in relation to a bill that would increase veterans' disability and survivor benefits. Although Social Security and military and civilian retired pay are automatically adjusted each Dec. 1 based on the change in the Consumer Price Index measure of the cost of goods and services, increases in veterans' benefits require a change in law. Legislation pending in the House and Senate would give veterans' the same increase, if there is one, that goes to Social Security recipients.

Steve Strobridge of the Military Officers Association of America said the 0.1 percent forecast for a COLA doesn't mean much because it is subject to change. Earlier this year, congressional analysts predicted there would be no change in the Consumer Price Index for three years, he said. "We just have to see what happens," he said.

There was no COLA in 2009 after the formula for determining the federal adjustment revealed consumer prices had dropped by about 2 percent between the third quarter of 2009 and the third quarter of 2008. Federal law includes a provision that prevents benefits from dropping in this situation. Instead, there simply was no change.

"You cannot really say that a 1/10th of a percentage point increase is better than nothing because when it comes to COLAs, it is what it is," Strobridge said. "You could argue that having no change in your retired pay in December at a time when prices had fallen was better than getting a small increase that matches the CPI. It is all in your perspective."

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