2026 federal military pension cost-of-living adjustments

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                Unemployment Insurance
               ADVISORY SYSTEM                           CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                       OUI/DUIO
             Washington, D.C. 20210                      DATE
                                                         December 29, 2025


ADVISORY:       UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 03-26

TO:             STATE WORKFORCE AGENCIES

FROM:           LORI FRAZIER BEARDEN
                Acting Assistant Secretary

SUBJECT:        Federal Military Pensions Cost-of-Living Adjustments (COLAs)

1. Purpose. To ensure State Workforce Agencies (SWAs) are aware of the Federal military
   retired pay annual COLA provided by the Department of Defense.

2. Action Requested. The Employment and Training Administration (ETA) requests that State
   Administrators provide the information in this Unemployment Insurance Program Letter
   (UIPL) and Attachment I to the appropriate staff.

3. Summary and Background.

   a. Summary – This UIPL provides SWAs with information regarding the Federal military
      retired pay annual COLA provided by the Department of Defense effective December 1,
      2025.

   b. Background – The military COLA is based on the previous year’s Consumer Price Index
      (CPI). Military COLA adjustments became effective December 1, 2025. 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 “member” includes former members of the
      Uniformed Services.

4. COLA for Retired Pay. Based on the increase in the CPI, there are COLA adjustments for
   retired pay, survivor annuities, and Survivor Benefit Plan premiums effective December 1,
   2025 (see Attachment I). For more information on COLAs for the different retirees, visit the
   Department of Defense website at: https://militarypay.defense.gov/Pay/Retirement/Cola/.

   States with laws that require a reduction of the unemployment insurance weekly benefit
   amount by the prorated weekly amount of retired pay and pensions should identify claimants
   affected by the COLA increases and make the appropriate reductions as required by state
   law.

5. Inquiries. Please direct inquiries to the appropriate ETA Regional Office.


   RESCISSIONS                                            EXPIRATION DATE
   None                                                   Continuing

6. References.

   •   5 U.S.C. Chapter 85, Subchapter II – Ex-Servicemen;
   •   20 C.F.R Part 614;
   •   Employment and Training Handbook No. 384, second edition, Handbook on
       Unemployment Compensation for Ex-servicemembers (UCX),
       https://www.dol.gov/agencies/eta/advisories/handbooks/et-handbook-no-384-2nd-edition.


7. Attachment.
   • Attachment I – Fiscal Year 2026 Adjustments to Retired/Retainer Pay, Survivor
      Annuities, and Premiums.

                                                                                   Attachment I


                  2026 ADJUSTMENTS TO RETIRED/RETAINER PAY,
                       SURVIVOR ANNUITIES AND PREMIUMS

This information is carried over from https://militarypay.defense.gov/Pay/Retirement/Cola/.

The following Cost-of-Living Adjustments (COLAs) are effective December 1, 2025, based on
the increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-
W) through the third quarter calendar year 2025. The term "retired pay" includes retainer pay and
the term "members" includes former members. Where applicable, the appropriate section of
United States Code (U.S.C.) is cited.

                                   COLAs for Retired Pay

    1. 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 their retirement,
      as follows:

       Retired Pay Based on
       Rates of Pay Effective               Percent Increase       10 U.S.C. Authority
       Before January 1, 2025               2.8 percent            1401a(b)(2)
       January 1 – December 31, 2025        2.6 percent            1401a(c)

    2. The retired pay COLA for those who first became members of a Uniformed Service on or
      after September 8, 1980, including those members covered by the High-3 or Blended
      Retirement System (BRS), is specified according to the effective date of their retirement,
      as follows:

       Retirement Effective:                Percent Increase       10 U.S.C. Authority
       Before January 1, 2025               2.8 percent            1401a(b)(2)
       January 1 - March 31, 2025           2.6 percent            1401a(d)
       April 1 - June 30, 2025              1.6 percent            1401a(d)
       July 1 - September 30, 2025          0.7 percent            1401a(d)
       October 1 - December 31, 2025        0.0 percent            1401a(d)

    3. The retired pay COLA for those who first became members of a Uniformed Service on or
      after August 1, 1986, and also elected to receive a career status bonus under the
      provisions of Sections 322 (as in effect before January 28, 2008) or 354 of Title 37
      U.S.C. is specified according to the date of their retirement, as follows:

       Retirement Effective                 Percent Increase       10 U.S.C. Authority
       Before January 1, 2025               1.8 percent            1401a(e)
       January 1 - March 31, 2025           1.8 percent            1401a(e)
       April 1 - June 30, 2025              1.1 percent            1401a(e)
       July 1 - September 30, 2025          0.5 percent            1401a(e)
       October 1 - December 31, 2025        0.0 percent            1401a(e)

                                                                               Attachment I


                            COLAs for Survivor Annuities

4. Retired Serviceman's Family Protection Plan annuities payable on December 1, 2025,
   under the provisions of Subchapter I of Chapter 73, Title 10, U.S.C., to the spouse or
   child of a member who died on or before March 20, 1974, will be increased by 2.8
   percent (ref: 10 U.S.C. 1434 (e)).

5. Annuities under the Survivor Benefit Plan (SBP) and Reserve Component Survivor
   Benefit Plan (RCSBP) under the provisions of Subchapter II of Chapter 73, Title 10,
   U.S.C., will be increased by the same percentage specified in paragraphs 1, 2, or 3 above
   by which the retired pay of the person providing the annuity would have been increased
   at such time if the person were alive and otherwise entitled to such pay. (ref: 10 U.S.C.
   1451 (g)).

6. COLAs for supplemental annuities paid to certain low-income widows of members who
   were deceased before November 1, 1953, will be increased 2.8 percent (ref: Public Law
   (P.L.) 100-456, section 653(c), as amended, see 10 U.S.C. 1448 note).

7. Annuities for Certain Military Surviving Spouses (ACMSS) payable monthly under the
   provisions of section 644, P.L. 105-85, November 18, 1997 (as amended), will be
   increased 2.8 percent from $329.56 to $338.79 effective December 1, 2025. (ref: P.L.
   105-85, sec 644, as amended; see 10 U.S.C. 1448 note).

                 Increase in the SBP Low-Cost Premium Threshold

8. Previous amounts with respect to which the 2.5 percent factor of the SBP premium (cost)
   formula apply will be adjusted effective December 1, 2025, in conjunction with the
   adjustments in retired pay made under the provisions of Section 1401a of Title 10, U.S.C.
   (ref: 10 U.S.C. 1452(a)(4)(B)). The Defense Finance and Accounting Service will
   perform necessary calculations to determine actual premiums based on the individual
   circumstances of each case.

9. The amount with respect to which the 2.5 percent factor of the SBP premium (cost) is
   applied will be increased *3.8 percent effective January 1, 2026, from $1,056 to
   $1,096. The threshold premium is $27.40. Therefore, the Low-Cost Threshold premium
   is $27.40 plus 10% of the difference between retired pay and the threshold amount. The
   breakeven base amount is $2,348.57. (ref: 10 U.S.C. 1452(a)(4)(A)).

   *3.8 percent is Assumed based upon the President’s FY2026 budget request.