FRA NewsBytes - 10-25-2013


Government Open, But Big Sequestration Cuts Loom
Although the government shutdown is temporarily over and the debt ceiling deadline has been extended until February 7, 2014, sequestration cuts for the Department of Defense (mandated by the Budget Control Act of 2011) will continue to be implemented for 10 years unless alternative savings are found or Congress repeals the law.

The agreement to end the government shutdown does not provide any additional flexibility for Defense regarding the $52 billion in cuts slated for the second round of sequestration that will occur January 15, 2014. These scheduled cuts are creating pressure to offset sequestration reductions, including those related to personnel – smaller active duty/Reserve pay increases, increasing TRICARE fees for retirees under age 65, reducing stateside housing allowances (BAH) and reducing future Cost of Living Adjustment increases for retirees. This week’s Tom Philpott article (10-24-13) on the FRA home page provides further explanation of this dilemma at:

Members are strongly urged to use the FRA Action Center to ask their elected officials to exclude Defense from sequestration at:

2014 COLA Announcement Delayed
The announcement by the Bureau of Labor Statistics (BLS) informing beneficiaries of the annual Cost of Living Adjustment (COLA) is usually announced this week, but has been delayed until October 30, 2013, due to the government shutdown. Although the announcement has been delayed, FRA has been assured that the increase will still take effect on December 1, 2013, and will be reflected in paychecks starting December 31, 2013.

COLAs impact military retired pay, VA benefits for disabled veterans, survivor annuities and Social Security benefits and are determined by the Consumer Price Index (CPI).  CPI determines the rate of inflation and is based on the cost of a “basket of goods” for the average American during the period of October 1 to September 30 each year.

The purpose of the COLA is to ensure that beneficiary’s purchasing power is not eroded by inflation. Last year’s increase was 1.7 percent and experts are predicting that the 2014 increase will be 1.4 or 1.5 percent.

Retirement Commission Begins Hearings
The Military Compensation and Retirement Modernization Commission will begin public hearings in November. The National Defense Authorization Act for Fiscal Year 2013 established a nine-member commission to review military compensation and retirement programs and make recommendations for their modernization to the president and Congress in the spring of 2014. President Obama has charged the commission to review “the full breadth of the systems,” including healthcare, military family support, and any federal programs that could influence the decision of current or future service members to stay in uniform or leave the service. Before making their final recommendations, the commission must examine the impacts of proposed recommendations on currently serving members, retirees, spouses, children and survivors. The commission has also been instructed not to alter the current retirement system for those already serving, retired or in the process of retiring. Along with a review of military compensation, the president asked that the commission look at the “interrelationship of the military’s current promotion system.” 

The Pentagon is required to provide their recommendations to the commission no later than November 1, 2013. FRA has been working with other members of The Military Coalition (TMC) to coordinate efforts to ensure that the concerns of the military and veterans communities are clearly communicated to commission members.