Retired Pay Newsletter
December 14, 2005

THIS BULLETIN UPDATE CONTAINS THE FOLLOWING ARTICLES:

Cost-of-Living-Allowance (COLA) Increases 
Based on the increase to the Consumer Price Index (CPI), there will be a COLA increase for retired pay and Survivor Benefits Plan (SBP) annuities effective December 1, 2005. Retirees and annuitants eligible for the full COLA increase will receive 4.1 percent.

Retirees who first became a member of a uniformed service before September 8, 1980 and retired January 1, 2005 or after will receive a 3.4 percent COLA increase.

The COLA increase for those entering the service on or after September 8, 1980 will be as follows:

• 4.1% for those retiring before 1/1/05
• 3.4% for those retiring in the 1 st quarter, FY2005
• 2.8% for those retiring in the 2 nd quarter, FY2005
• 1.4% for those retiring in the 3 rd quarter, FY2005
• 0% for those retiring in the 4 th quarter, FY2005

The COLA increases will be reflected in the January 3, 2006 payment.

This 4.1 percent 2006 COLA is also applied to VA rates effective December 1, 2005 and will result in corresponding increases in Combat-Related Special Compensation (CRSC) amounts. Most eligible retirees will receive an increased CRSC payment on January 3, 2006, unless they are already receiving the maximum amount of CRSC allowed by law.

Retirees and annuitants can review the details of their pay account by accessing the Defense Finance and Accounting Service (DFAS) myPay Web site at https://mypay.dfas.mil . Logging onto myPay will also allow eligible recipients to view details of their CRSC pay (available by clicking on the Combat-Related Special Compensation Monthly Pay Statement link.

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Annual pay statements and tax forms available to myPay users
Military retirees and annuitants can receive their Form 1099R, Retiree Account Statement (RAS) or Annuitant Account Statement (AAS) through myPay two to three weeks earlier than receiving it in the mail, allowing for faster filing. To access a retiree or annuitant pay account, or to learn more about myPay , eligible users are encouraged to visit the Web site at https://mypay.dfas.mil .

Year-end pay and tax statements on myPay will be available as follows:

• Retiree Account Statement will be available on December 8, 2005.
• Annuitant Account Statement will be available on December 16, 2005.
• Retired/Former Spouse 1099R will be available on December 16, 2005.
• Annuitant 1099R will be available on December 16, 2005.

Members wishing to establish a myPay account can find information on the Internet at How to get a myPay PIN .

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Open season scheduled for Combat-Related Special Compensation (CRSC) and Concurrent Retirement and Disability Pay (CRDP)
The legislation providing for the payment of CRSC or CRDP requires that those retirees eligible for both CRSC and CRDP make an annual election for which payment they want to receive. The next CRSC/CRDP Open Season is scheduled for January 1 through January 31, 2006. CRDP, a type of retired pay, was recently included in the regular monthly retired pay payment. As such, withholdings are processed the same as any other retired pay. CRSC is a non-taxable, special pay not considered a part of retired pay. Eligible retirees will receive a letter that provides explanation and instruction along with an election form that must be returned to DFAS. Once an election is made, it is irrevocable until the next CRSC/CRDP Open Season.

Retirees must apply for CRSC through their branch of service. Additional information on CRSC, guidance, and addresses are available online on the CRSC page on the DFAS Retired Pay website. Click here for a CRSC application. Eligibility for CRDP is automatic based on meeting minimum disability rating criteria and does not require an application.

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Designating your beneficiaries made easier
Retirees have complained that finding access to the online version of the Designation of Beneficiary Information (DD Form 2894, and known as the Beneficiary Card) is difficult on the DFAS Web site ( www.dod.mil/dfas).

The form can now be accessed via the Beneficiary Card link found on the DFAS Retired Pay home page (the link is in the left-hand navigation bar).

This form is not a part of the Survivor Benefit Plan (SBP).

About the Designation of Beneficiary Information card:
Who it's for …… Military retirees.

What it's for…… The Defense Finance and Accounting Service (DFAS) uses this form to determine who will receive a retiree's final prorated paycheck – also known as Arrears of Pay (AOP) – upon the retiree's death. For example, if a retiree dies on the 5 th day of the month, the designated beneficiary will receive 5 days worth of retired pay. In addition to retired pay, AOP may include any monies owed, but not paid during the retiree's lifetime, such as a credit for SBP overpayment or returned allotment payments.

When to use it…… Retirees should complete this form and return it when the remarks section of their Retiree Account Statement (RAS) states “WE DO NOT HAVE ANY BENEFICIARY INFORMATION ON FILE ON YOUR COMPUTERIZED PAY ACCOUNT” or when their family circumstances change. For example, retirees should use this form to update their beneficiary designation due to marriage, divorce, child birth, or if they simply wish to change their current beneficiary.

How to complete the form…… Most of the fields on this form are self-explanatory; the only fields that might need explanation are the “SHARE” fields in section 2 (Designated Beneficiary Information).

Retirees can enter up to five beneficiaries to receive all or a portion of their AOP, or can establish an order of precedence of beneficiaries. Instructions for adding more than five beneficiaries in included on the second page of the form.

To designate two or more beneficiaries to receive AOP, a retiree should complete each subsection (name, SSN, relationship and address). The SHARE should be written as a percentage of the AOP the beneficiary is to receive (such as 60%). The total of the SHARE column cannot exceed 100%.

To establish a beneficiary order of precedence, the retiree should complete section 2 in order, with the primary beneficiary listed first. Each beneficiary should be designated to receive 100% in the SHARE column.

Anyone can be designated as a beneficiary, from family members to friends and associates.

Retirees who do not specifically designate beneficiaries will have their AOP distributed in accordance with the Federally-Mandated Order of Precedence. Under this process, AOP would be paid in order to a spouse, natural or adopted children, grandchildren, etc.

Note : Stepchildren are not eligible beneficiaries for AOP in accordance with the Federally-Mandated Order of Precedence. Therefore, in order for a stepchild to receive a portion of AOP, the retiree must designate each beneficiary specifically and provide percentages.

Forms MUST be signed and dated to be considered valid. Additionally, completed forms must be received by DFAS before the retiree's death.

Where to send your Beneficiary Card……

Fax the completed form to (800) 469-6559,
or mail the form to:

Defense Finance and Accounting Service
U.S. Military Retirement Pay
P.O. Box 7130
London, KY 40742-7130

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