Why Do Cost of Living
Allowances (COLA) Fluctuate

Increased COLA is the result of:

Decreased COLA is the result of:

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Why should the COLA increase?

Assignee’s contribution from salary now covers a smaller percentage of host goods and services costs
Company should increase COLA to make up the gap

Why should the COLA decrease?

Assignee’s contribution from salary now covers a higher percentage of their host goods and services costs
Company should reduce COLA to not overcompensate the assignee

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What is the Impact?

Assignees are expected to contribute from salary; COLA makes up only a portion of total host goods and services expenditures
Changes in exchange rates and relative (host compared with home) inflation impact total host goods and services expenditures (home salary contribution plus COLA), but only COLA flexes up or down to ensure the assignee has sufficient funds to support the host goods and services expenditure. This means a 10% exchange rate change does NOT equal a 10% change in COLA. Percentage changes in COLA will be greater than the percentage changes in inflation and/or exchange rate. However, COLA changes can be easily reconciled by comparing the change in the total host goods and services expenditure

Use the International Assignment Calculator to:

Manage and update your assignee allowances online

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