COLA levels to drop soon

Beginning in May, American servicemembers, civilians and their families who receive funds through the Cost of Living Allowance, or COLA, program will receive less money.

According to the U.S. Air Forces in Europe Directorate of Financial Manager and Comptroller, the purpose of the overseas COLA is to ensure that servicemembers have the same purchasing power at their overseas duty station as they would if they lived in the U.S. 

To maintain purchasing power, the Per Diem Committee in Washington D.C. adjusts COLA annually based on where servicemembers shop and the prices of goods and services they buy. COLA is also adjusted as often as every two weeks based on fluctuation of the local currency relative to the U.S. dollar.

COLA is currently paid based on a 32 percent difference in the price of goods and services between the U.S. and the KMC/Spangdahlem. Annual survey data from Germany and inflation data from the U.S. indicate that the purchasing power gap has narrowed from 32 to 28 percent because the prices of goods and services in the U.S. are rising at a greater rate than in Germany.

This assessment led the Per Diem Committee to adjust Germany’s COLA rates downward.

To ease the financial burden on overseas COLA recipients, reductions will take place over two months – May and June. For example, an  E-5 with 10 years of service and three dependents will see daily COLA reduced from $27.29 to $25.28 on May 1, and then to $23.87 on June 1.

For more information on overseas COLA, visit the Per Diem Committee Web site at  https://secureapp2.hqda.pentagon.mil/perdiem/ allowcol.html.
The USAFE FM encourages all personnel to plan accordingly.