ROYAL AIR FORCE LAKENHEATH, England -- Liberty Wing –
The 48th Comptroller Squadron would like to thank you for bringing your financial concerns to our attention. Unfortunately, we are unable to directly adjust the Overseas Cost of Living Allowance (COLA) you receive, we did request a Retail Price Schedule (RPS) survey. The RPS is a market basket survey to determine the cost of local goods and services. This will determine whether, the value of the pound decreased, the cost of goods and services increased.
The RPS doesn’t guarantee an increase in our COLA but will ensure we are receiving the correct COLA for our location. The survey will be conducted from Jan. 9 to 13, 2017, the effects of which, will be implemented shortly thereafter. I’ve also included additional information about COLA, its purpose, how it is calculated and a website where you can find additional information.
COLA is a non-taxable supplemental pay allowance, designed to offset overseas prices of non-housing goods and services. Overseas COLA is intended to equalize purchasing power so that members can purchase the same level of goods and services overseas as they would if they were stationed in Contiguous United States (CONUS). Overseas COLA is calculated by comparing the prices of goods and services overseas with prices for equivalent goods and services in CONUS.
The result of this price comparison is an index that reflects a cost of living. If prices in CONUS are rising at a greater rate than those overseas, a member’s Overseas COLA will decrease, and vice versa. However, if prices rise or fall at the same rate, a member’s Overseas COLA will stay the same.
This means that if the cost of living is 30% higher here than in CONUS that does not necessarily mean you will receive that 30% as an increase in COLA. This is because COLA is calculated on spendable income, not total income. Spendable income is the total income minus housing expenses, taxes, savings, life insurance, gifts and contributions.
The Defense Travel Management Office's (DTMO) Allowances Branch use spendable income tables computed for different family sizes and income levels. These tables are based on consumer expenditure surveys from the Department of Labor's Bureau of Labor Statistics that show how people typically spend their income. The table can be found here:
http://www.defensetravel.dod.mil/site/pdcFiles.cfm?dir=/Allowances/COLA/Compensation_Tables/Spendable_Income_Tables/
For currency fluctuations, DTMO's Allowances Branch can adjust COLA as often as every payday (1st and 15th). COLA is adjusted only for the portion of income that the typical member spends on the local economy (in foreign currency).
Example:
If the living-pattern survey for your area shows that typical members spend 50 percent of their income on the local economy and 50 percent in dollars (i.e., on-base), then only that portion of COLA based on local currency purchases is changed with currency fluctuations. If the value of the dollar against the local currency falls 4%, in this scenario your COLA would be increased 2%.
There are two surveys that determine the relative cost of living overseas compared with CONUS:
• Living Pattern Survey (LPS) – once every three years DTMO asks a sample of Service members where they shop and what percentage of goods they purchase from; Local markets, Commissary/Exchange, and from the internet.
• Retail Price Schedule - annually captures prices approximately 120 goods and services based on outlets identified in the Living Pattern Survey
To calculate how much COLA you receive follow the link below and enter the Location (Locality Code) Lakenheath/Mildenhall (GB352) http://www.defensetravel.dod.mil/site/colaCalc.cfm
Please email us at 48FW.Finance@us.af.mil mailto:48FW.Finance@us.af.mil with any additional questions.