From 1 July 2021, the way in which the Armed Forces’ Local Overseas Allowance (LOA) is calculated will be changing. The changes will make the allowance more transparent, fairer to all Service personnel, and improve oversight. The changes are not a saving measure but designed to be cost neutral. This modernisation means that Service personnel around the world will find that the amount of LOA they receive may either increase, decrease or remain broadly the same. Rates will be published in June 21. The changes will be fully implemented over a three-year transition period.
We hope this will be positive for many Armed Forces personnel, especially those of lower ranks or with young families.
LOA will still be paid automatically alongside the monthly salary and will continue to contribute towards the additional local cost of day-to-day living when Service personnel are required to serve overseas. One of the most significant changes will be the introduction of a single band for all Service personnel regardless of rank, removing the previous rank-based banding system.
The new the LOA package will provide better support to Service personnel. This is achieved by targeting contributions, through auditable payments, towards private vehicle and respite costs, which are currently included in the daily rate and spread throughout the term of an assignment. As such, when comparing the new LOA with the current it is important to compare the overall package rather than making a straight comparison between daily rates.
Why is this happening now?
The changes to LOA are the result of a thorough review of the current methodology, which has taken more than three years to complete. The new methodology is based on commercially available data used by multi-national corporations like Shell and BP, as well as the Foreign, Commonwealth and Development Office (FCDO), and is needs based. The structural changes will reinforce the underpinning rationale for LOA, strengthen its governance, and improve equity in the treatment of all Service personnel wherever they are serving overseas.
When will this change happen?
The new LOA package will be implemented on 1 July 2021 and will be delivered as a phased transition process lasting until 2024. Rates will be available to Service personnel from June 2021. Access to the Overseas Private Vehicle provisions will be available from 1 April 2021.
Please click here for more on these changes.