Which statement best describes Overseas Cost of Living Allowance (COLA)?

• A. Basic Pay.
• B. Hazardous Duty Pay.
• C. Overseas Cost of Living Allowance (COLA).
• D. Family Separation Allowance.

Answer: (C)

Overseas COLA is an allowance that offsets the higher cost of living in foreign duty stations, helping maintain your purchasing power compared with costs back home. It’s separate from Basic Pay, which is the fixed salary you earn, and it’s not designed for hazardous conditions (Hazardous Duty Pay) or for costs tied to being away from family (Family Separation Allowance). The amount of COLA depends on location and family status and can change with the local cost of living, so it adjusts your pay to match local prices rather than just adding a flat amount. In short, this allowance exists specifically to level the playing field when living abroad by counteracting price differences.