Updates Overseas Cost-of-Living Allowance
The Department of Defense has announced updates to the Overseas Cost-of-Living Allowance (OCOLA) adjustment process. OCOLA is an allowance that ensures service members stationed outside of the contiguous U.S. maintain the same level of purchasing power as those stationed within. The adjustments are based on the National Defense Authorization Act for Fiscal Year 2023 and are assessed using three primary data points, including a triennial Living Pattern Survey and an annual Retail Price Schedule. Under the new NDAA legislation, any decrease in OCOLA based on cost-of-living data greater than two points will be implemented in 50% increments on two separate dates during the May 15 and November 15 pay periods, with notification to Combatant Commanders and overseas points of contact provided at least 30 days prior to the first reduction. Any OCOLA decrease based on currency fluctuations will be implemented in full during the May and November pay periods, with CCMDs and POCs informed of potential effects throughout the year.
Based on the new NDAA legislation
- OCOLA decreases based on cost-of-living data greater than two points will be implemented in 50% increments on two separate dates during May 15 and November 15 pay periods.
- Combatant Commanders and overseas points of contact will be notified at least 30 days prior to the implementation of the first 50% reduction.
- CCMDs and overseas POCs were already notified of the new rates prior to March for the May 15 pay period reductions.
- Any OCOLA decrease based on currency fluctuations will be implemented in full during the May and November pay periods.
- The Department will continue to inform CCMDs/POCs of the potential effects of currency fluctuations on OCOLA rates throughout the year to prepare Service members for these changes.