ANNUAL ADJUSTMENT OF RETIRED PAY AND RETAINER PAY AMOUNTS FOR RETIRED MEMBERS OF THE ARMED FORCES UNDER AGE 62.

SEC. 403. ANNUAL ADJUSTMENT OF RETIRED PAY AND RETAINER PAY AMOUNTS FOR RETIRED MEMBERS OF THE ARMED FORCES UNDER AGE 62. (a) CPI Minus One Percent.—Section 1401a(b) of title 10, United States Code, is amended— (1) in paragraph (1), by striking “paragraphs (2) and (3)” and inserting “paragraph (2), (3), or (4)”; (2) by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively; and (3) by inserting after paragraph (3) the following new paragraph (4): “(4) Reduced percentage for retired members under age 62. “(A) In general. Effective on December 1 of each year, the retired pay of each member and former member under 62 years of age entitled to that pay shall be adjusted in accordance with this paragraph instead of paragraph (2) or (3). “(B) CPI minus one. If the percent determined under paragraph (2) is greater than 1 percent, the Secretary shall increase the retired pay of each member and former member by the difference between— “(i) the percent determined under paragraph (2); and “(ii) 1 percent. “(C) No negative adjustment. If the percent determined under paragraph (2) is equal to or less than 1 percent, the Secretary shall not increase the retired pay of members and former members under this paragraph. “(D) Revised adjustment upon reaching age 62. When a member or former member whose retired pay has been subject to adjustment under this paragraph becomes 62 years of age, the Secretary of Defense shall recompute the retired pay of the member or former member, to be effective on the date of the next adjustment of retired pay under this subsection, so as to be the amount equal to the amount of retired pay to which the member or former member would be entitled on that date if increases in the retired pay of the member or former member had been computed as provided in paragraph (2) or as specified in section 1410 of this title, as applicable, rather than this paragraph. “(E) Inapplicability of catch-up rule. Paragraph (5) shall not apply in the case of adjustments made, or not made, as a result of application of this paragraph.” . (b) Restoral of Full Retirement Amount at Age 62.—Section 1410(1) of title 10, United States Code, is amended by striking “paragraph (3)” and inserting “paragraph (3) or (4)”. (c) [10 U.S.C. 1401a note] Effective Date.—The amendments made by subsections (a) and (b) shall take effect on December 1, 2015.