COVID-19’s Impact on Military Retirees’ Compensation
COVID-19’s Impact on Military Retirees’ Compensation
The pandemic has greatly impacted the economy and that can be felt in a number of places. Unfortunately, military veteran compensation has not escaped the grasp of COVID-19 and sadly, many retirees have been and will continue to feel its effects well into next year.
Bureau of Labor and Statistics data from the first quarter of 2020 shows that the nearly 69 million retirees receiving Social Security Cost-Of-Living-Adjustment may be seeing a significant drop in 2021, down to 0.8% from this year’s 1.6%. It’s possible that number may hit 0 by January of next year. This fall is due to a number of factors taking place in today’s economy, but one major indictor is the plunge in gas prices which heavily influences the Consumer Price Index for Urban Wage Earners and Cleric Workers (CPI-W) – what is used to determine COLA percentages for eligible recipients. April brought about the largest decline in month-to-month CPI-W since the Great Recession. The prices of goods and services have continued to plummet since then as well. It should be noted that economic impact may level out or subside by July, which is when the CPI-W measurement period begins for the following year’s COLA determinations.
Additionally, federal workers may not see a pay raise in 2021 either. The Office of Personnel Management announced that due to disruption caused by COVID-19, it was postponing the federal government’s annual Federal Employee Viewpoint Survey, which measures among many things, compensation satisfaction. As unemployment rose to more than 20 million in April, and others took pay cuts just to maintain a regular paycheck, it’s unlikely that even the suggested 1% pay raise for federal employees that was proposed in February of this year will be fulfilled.
There’s also the long-standing matter of eliminating/amending two problem-laws: Government Pension Offset (GPO) and Windfall Elimination Provision (WEP). Due to these laws, millions of federal/public employees lose millions of dollars in supposed benefits for either themselves or their spouses. WEP takes away roughly $480 out each month’s Social Security benefit, while GPO erases a widow(er)’s Social Security benefit entirely. Due to COVID-19, it’s likely that these issues will still persist, and addressing them will again be pushed to a later agenda while the current crisis is sorted. Meanwhile, senior veterans continue to be heavily impacted financially while focus has been shifted.
The federal government has done a few things through the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide provisions to protect retirement funds. It altered how you can make withdrawals from Individual Retirement Accounts (IRAs), 401ks, and Thrift Savings Plans (TSPs). While it is strongly advised that you not withdraw funds early, the current state of the economy can mean you’ve reached your last resort. Through the CARES Act, most Americans were also sent stimulus checks.
There are also a few states that are stepping in to help veterans deeply affected by the pandemic. In March, Minnesota started offering two new financial relief programs, the COVID-19 Disaster Relief Grant and the COVID-19 Special Needs Grant. The Disaster Relief Grant can provide $1,000 to veterans who have been negatively, financially affected due to the pandemic. The Special Needs Grant provides a one-time stipend directly to a creditor for a veteran who has been unable to pay bills due to unemployment or under-employment as a direct result of the pandemic. Indiana has chosen to expand existing programs, loosening requirements for its current Military Family Relief Fund to reach a greater number of veterans (and active-duty members) that need additional support during this time.
While the projected outlook for 2021 doesn’t necessarily instill the most positive outlook, as of now these are still just that – projections.
RELATED:
- What Veterans Need to Know About COVID-19
- COVID-19 Affecting Military Ability to Pay for Healthcare?
- Help For Military Families During COVID-19 Pandemic
- Veterans Economic Recovery Act Bill Introduced
- VA Aid for Homeless During COVID-19
