Cost-of-living allowance to be cut in Germany
RAMSTEIN AIR BASE, Germany — Servicemembers in Germany might want to put a little money aside over the next several weeks. Their cost-of-living allowance will fall an average of 12 percent to 14 percent beginning May 1.
The drop is the result of an annual price survey conducted throughout Germany, said Maj. Brian Kehl, chief of the Accounting and Finance Operations Branch for the U.S. Air Forces in Europe command. The allowances for troops living in other parts of Europe, including Italy and the United Kingdom, will not be affected.
Although the weak U.S. dollar has remained steady against the euro, the survey showed that inflation in the United States has risen at a higher rate than in Germany.
“On some goods, prices might be lower in the U.S. than Germany … but across the broad spectrum of those goods it was definitely a higher inflation in the U.S,” Kehl said.
“The U.S. inflation right now is not exorbitant, but Germany’s is almost zero right now,” he added. “And COLA is based upon that difference in prices. So as that difference shrinks, COLA then shrinks as well.”
The reduction is so large the Per Diem, Travel and Transportation Allowance Committee in Washington, D.C., will spread it across two months to ease the financial impact. The first half of the drop will become effective May 1 and the second half June 1.
Individual allowance rates — a supplement to give servicemembers the same purchasing power overseas as in the continental U.S. — depend on such things as location, rank, time in service and number of family members.
For example, a servicemember stationed in Kaiserslautern at an E-5 pay grade with 10 years service and three family members would see his or her daily rate go from $27.29 to $25.58 in May and drop to $23.87 in June. That military member will receive about $100 a month less in the allowance in June than in March.
A pair of surveys and the exchange rate help determine the amount of COLA for Americans living overseas. Every three years, servicemembers take an online questionnaire that asks which stores they shop and what items they buy. An annual survey then gathers the prices of 120 goods and services on and off base based on the online questionnaire.
Teams of volunteers tasked with gathering market data across Germany submitted their results in December, said Air Force Master Sgt. Michelle Ogden, manager of the U.S. Air Forces in Europe command’s travel, pay, policy and procedures. Similar surveys are conducted in places such as Italy, Spain and the United Kingdom but at different times.
It’s not unusual for the committee to spread a rate drop over the course of a couple of months, Kehl said.
“There’s a real conscious effort to say, ‘We know it’s going down.’ We know the data supports a reduction. But we understand people plan on a COLA as part of their ability to spend and budget so we’ll slowly take it down over time so it’s not a huge impact in a single month,” he said.
For more information on COLA rates and to search rates in each location, visit the allowance committee’s Web site at http://www.dtic.mil/perdiem/.
No word yet on DOD civilians
Despite the U.S. military warnings Friday that servicemembers’ cost-of-living allowance will decrease in Germany in the coming months, there has been no such word on how, or if, Defense Department civilians’ paychecks will be affected.
Even though new COLA rates posted late Thursday showed no change in any European country where large numbers of U.S. troops are based, servicemembers in Germany will see their COLA fall an average of 12 percent to 14 percent beginning in May.
The civilian equivalent to the COLA, known as post allowance, is set by the U.S. State Department and designed to help offset the high cost of living abroad. That rate last changed on March 4. The State Department’s Web site, which tracks the changes, was last updated March 18.
In March, Americans living in Europe paid on average about 1½ cents more for a euro than they had in February, while the British pound has been about 1½ cents cheaper this month than last.
The actual cash for post allowance depends on duty station, salary and number of dependents. It can change as often as every two weeks.
— Stars and Stripes