All BFG personnel are advised that from April 1, 2016, the Forces Fixed Rate (FFR) has decreased from €1.38 to €1.29 per pound sterling.
Military personnel are advised that from April 1 the rate of Local Overseas Allowance (LOA) has changed.
The daily rates for accompanied personnel have increased by 78 per cent on average, while single / unaccompanied rates have increased by 210 per cent on average.
The Forces Fixed Rate (FFR), the exchange rate that the MoD uses to pay us, decreased from €1.38 to €1.29 per pound sterling.
That means you will receive fewer euros per pound sterling, and therefore, the allowance you receive to offset the costs of living overseas was increased.
Changes to the LOA are routine and happen as a result of regular lifestyle and expenditure patterns surveys, pricing exercises assessments of the local costs of living or a change in the FFR.
The FFR changes when commercial exchange rates move against sterling at either +/-5 per cent on average over four weeks or +/-3 per cent sustained over 13 weeks.
Changes to FFR are calculated on the second Monday of each month for publication on first day of the following month along with the associated LOA rates.
Local Overseas Allowance
LOA is a non-taxable allowance paid to Service personnel in overseas locations and contributes to the necessary additional costs of living overseas.
It is not intended as an incentive for service abroad and does not attempt to reflect the precise personal circumstances of individuals. Personnel are expected to spend the same level of salary on routine living as they would in the UK.
LOA is reviewed annually with an in-country re-pricing exercise and a major review undertaken every four to five years.
The rates of LOA are also linked to changes in the value of the British pound; LOA rates are adjusted when the Forces Fixed Rate of Exchange (FFR) changes.
As the pound strengthens, it can buy more euros. As a result, the FFR increases and the rates of LOA will reduce.
Conversely, when the pound weakens, the FFR decreases and the rates of LOA increase to compensate for the additional cost of living overseas.
Service personnel retain similar purchasing power, as their total salary in pounds sterling has greater value in Germany.
LOCAL OVERSEAS ALLOWANCE (LOA) – GERMANY
Comparison of LOA rates following FFR update April 2016. Important – The LOA rate changes take effect from April 1, 2016.