BDSUS LOCAL OVERSEAS ALLOWANCE UPDATE – RATES WEF 01 Jul 2021
Revised Local Overseas Allowance (LOA) rates will be implemented from 1 Jul 21 and have been received today. The new rates for the USA have been emailed to all registered emails and are posted in full on Defence Connect and MODNET Sharepoint. The rates should also appear on www.gov.uk in the next few days. The rates introduce new regional rates for the USA as previously briefed.
Overall, most rates in the USA have increased compared to the current rate, although there are a small number of decreases, mostly at OF4 and above, in some regions. You have all received separate communications on the LOA project and the revised calculation so I will not repeat the detail here, although it is useful to reinforce that that project is not a cost-saving exercise. The new LOA rate is made up of the following: Cost of Living Element, an element to recognise the relative difference in the average cost of living; Environmental Factor, an element to recognise specific environmental factors at a location and a Location Factor, an element to contribute towards additional expenses such as legal requirements and other additional necessary costs. The wider LOA provision includes Overseas Private Vehicle Provision (OPVP), Respite and a child element to offset any additional costs attributed to accompanying children. We also draw your attention to the additional car rate that will be added to the daily LOA rate. Banding was historically in payment as part of the LOA provision, but an executive decision was made to balance LOA payments into one band removing both the lower and higher banding.
The imperative was to refresh the calculation methodology, to provide a defensible allowance to meet its aim. In locations where LOA rates are set to decrease on 1 Jul 21, it was originally intended that those affected by reductions would experience no greater than 25% of the rate reduction year on year until the transition is complete on 1 Jul 24. Due to the Secretary of State’s direction that there should be no rank based banding this will not be possible in all cases but the maximum reduction does not not exceed $5.00 on the daily rates.
This information is hot off the press and BDSUS will continue to analyse the impact and will provide further information as it is received. In the short-term we would appreciate your patience in demands for additional information and questions until we have absorbed the detail.
Links for the new LOA rates:
Defence Connect (Defence Gateway Account Required) – https://jive.defencegateway.mod.uk/docs/DOC-594101
BDSUS ICS SharePoint (MODNET Access Required) – https://modgovuk.sharepoint.com/:x:/r/teams/cui2-498/CorpServ/ICS/ICS%20Military%20Public%20new/Copy%20of%2020210611-DL-Revised_LOA_Rates-1Jul21-Annexes.xlsx?d=w57da0eb4455e4538b1f7cc9b811309b1&csf=1&web=1&e=qXnbgt