2021 military pension cost of living adjustments and UI benefits

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                 Unemployment Insurance
               ADVISORY SYSTEM                            CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                        OUI/DUIO
             Washington, D.C. 20210                       DATE
                                                          December 17, 2020


ADVISORY:        UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 8-21

TO:              STATE WORKFORCE AGENCIES

FROM:            JOHN PALLASCH
                 Assistant Secretary

SUBJECT:         Federal Military Pensions Cost of Living adjustments (COLA)

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

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

        b. Background – The military COLA is based on the previous year’s Consumer Price
           Index (CPI). Military COLA increases became effective December 1, 2020. 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,
   2020 (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/

5. Instructions. 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.

6. Inquiries. Please direct inquiries to the appropriate Regional Office.


 RESCISSIONS                                              EXPIRATION DATE
 None                                                     Continuing

7. Attachment. Fiscal Year 2021 Adjustments to Retired/Retainer Pay, Survivor Annuities,
   and Premiums.

                                                                                    ATTACHMENT I


    FISCAL YEAR 2021 ADJUSTMENTS TO RETIRED/RETAINER PAY, SURVIVOR
                        ANNUITIES AND PREMIUMS

The following Cost-of-Living Adjustments (COLAs) are effective December 1, 2020, based on the
increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) through
the third quarter calendar year 2020. 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 a member 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, 2020                  1.3 percent              1401a(b)(2)
       January 1 – December 31, 2020           1.1 percent              1401a(c)

    2. The retired pay COLA for those who first became a member 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, 2020                  1.3 percent              1401a(b)(2)
       January 1 - March 31, 2020              1.1 percent              1401a(d)
       April 1 - June 30, 2020                 0.7 percent              1401a(d)
       July 1 - September 30, 2020             1.3 percent              1401a(d)
       October 1 - December 31, 2020           0.0 percent              1401a(d)

    3. The retired pay COLA for those who first became a member of a Uniformed Service on or
      after August 1, 1986, and also elected to receive a career status bonus under the provisions of
      section 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, 2019                  0.3 percent              1401a(e)
       January 1 - March 31, 2019              0.3 percent              1401a(e)
       April 1 - June 30, 2019                 0.3 percent              1401a(e)
       July 1 - September 30, 2019             0.3 percent              1401a(e)
       October 1 - December 31, 2019           0.0 percent              1401a(e)

                                  COLAs for Survivor Annuities

4. Retired Serviceman's Family Protection Plan annuities payable on December 1, 2018, 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 1.3 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 1.3 percent (ref: Public Law 100-456,
   section 653(c)).

7. Annuities for Certain Military Surviving Spouses (ACMSS) payable monthly under the
   provisions of Section 644, Public Law 105-85, November 18, 1997, will be increased 1.3
   percent from $276.17 to $270.64 effective December 1, 2020. (ref: P.L. 105-85, sec 644).

                   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, 2020, 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 3.0 percent effective January 1, 2021, from $869 to $895. The threshold
   premium is $22.38. Therefore, the Low-Cost Threshold premium is $22.38 plus 10% of the
   difference between retired pay and the threshold amount. The breakeven base amount is
   $1,917.86. (ref: 10 U.S.C. 1452(a)(4)(A)).

              Increase in the Special Survivor Indemnity Allowance (SSIA)

10. In accordance with provisions of Section 1450(m) of Title 10, U.S.C., as amended by section
    621 of P.L. 115-91 and Section 622 of P.L. 115-232, the maximum amount of SSIA payable
    will be increased by 1.3 percent effective December 1, 2020. The new SSIA rate will be
    $327. (ref: 10 U.S.C. 1450(m)).