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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

OWS

CORRESPONDENCE SYMBOL

DUIO

ISSUE DATE

January 11, 2002

RESCISSIONS

None

EXPIRATION DATE

Continuing

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 07-02

 

TO

:

ALL STATE WORKFORCE ADMINISTRATORS

 

FROM

:

GRACE A. KILBANE
Administrator
Office of Workforce Security

 

SUBJECT

:

Increase in Federal Military Pensions

 

  1. Purpose. To transmit Federal military retired pay due to annual cost of living adjustments (COLAs).

  2. Background. Military COLA increases were effective December 1, 2001, based on the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) through September 2001, and will be payable in the January 2002 annuity checks. Military retired pay, by law, is always rounded down to the next lower dollar amount. The term "retired pay" includes retainer pay and the term "members" includes former members.

  3. COLAs for Retired Pay. 

    1. Members Before September 8, 1980.  The retired pay COLA for those who first became members of a Uniformed Service before September 8, 1980, is specified according to the effective date of the active duty basic pay rate used to compute their retired pay as follows*:

      Retired Pay Based on
      Rates of Pay Effective
      Percent Increase 10 U.S.C. Authority
      Before Jan. 1, 2001 2.6 percent 1401a(b)(2)
      Jan. 1, 2001** 2.0 percent 1401a(c)
      July 1, 2001*** None - 0.0 percent 1401a(c)

      *  The effective date of a pay cell (i.e., a pay rate specified for a given grade and years of service) in the July 1, 2001, table is considered to be January 1, 2001, if the pay rate for that cell is unchanged from the January rate.

      **  Includes those whose retired pay is computed on a pay cell of the July 1, 2001, pay table unchanged from the rate for that pay cell in the January 1, 2001, pay table.

      ***  Includes those whose retirement pay is computed on a pay cell of the July 1, 2001, pay table changed from the rate for that pay cell in the January 1, 2001, pay table.

    2. Members On or After September 8, 1980. The retired pay COLA for those who first became members of a Uniformed Service on or after September 8, 1980, is specified according to the effective date of their retirement as follows:

      Retirement Effective Percent Increase 10 U.S.C. Authority
      Before Jan. 1, 2001 2.6 percent 1401a(b)(2)
      Jan. 1 - Mar. 31, 2001 2.0 percent 1401a(d)
      April 1 - June 30, 2001 1.1 percent 1401a(d)
      July 1 - Sept. 30, 2001 0.0 percent 1401a(d)
      Oct. 1 - Dec. 31, 2001 0.0 percent 1401a(d)

  4. Instructions. It is necessary for states with laws that provide for reduction of the weekly UI benefit amount by the prorated weekly amount of retirement pay and pensions to review the claimants records to identify claimants who will be affected by these COLA increases.

    States should take action to make the appropriate deductions as required by state law based on the increased military retired pay in accordance with state law.

  5. Action Required. State Administrators should provide the above information to appropriate staff.