COST-OF-LIVING ADJUSTMENTS OF MILITARY RETIRED PAY.

SECTION 1. COST-OF-LIVING ADJUSTMENTS OF MILITARY RETIRED PAY. (a) Rule for CPI–1 Formula for New Entrants.— Subsection (b) of section 1401a of title 10, United States Code, is amended— (1) by redesignating paragraph (4) as paragraph (5); and (2) by inserting after paragraph (3) the following new paragraph (4): “(4) Special rule for paragraph (3).— If in any case in which an increase in retired pay that would otherwise be made under paragraph (3) is not made by reason of law (other than any provision of this section), then (unless otherwise provided by law) when the next increase in retired pay is made under this subsection, the increase under paragraph (3) shall be carried out so as to achieve the same net increase in retired pay under that paragraph that would have been the case if that law had not been enacted.”. (b) Pro Rating of Initial CPI Adjustment for New Members.— Subsection (e) of such section is amended by striking out “only by” and all that follows in that subsection and inserting in lieu thereof the following: “by the percent (adjusted to the nearest one-tenth of 1 percent) equal to the difference between— “(1) the percent by which— “(A) the price index for the base quarter of that year, exceeds “(B) the price index for the calendar quarter immediately before the calendar quarter during which the member became entitled to retired pay; and “(2) one-fourth of 1 percent for each calendar quarter from the quarter described in paragraph (1)(B) to the quarter described in paragraph (1)(A). If in any case the percent described in paragraph (2) exceeds the percent determined under paragraph (1), such an increase shall not be made.”.