# Cost of living allowance?



## RShak (May 4, 2009)

I just had a few questions about Cost of Living Allowance in England? Kind of lost, I found a few different answers online but I was just curious about what it is all about. thanks.


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## sahana_kumar (Apr 22, 2009)

*COLA - Cost of Living Allowance or Adjustment*

Hi,

COLA is either called Cost of Living Allowance or Living Adjustment. Its nothing but an additional percentage of your salary given to compensate the higher cost of living in the new country.

Say for eg, you are moving from India to UK. its a move from a low cost country to high cost country. Obviously you cannot survive with the same salary as in india. hence inorder to allow you the right purchasing power in UK, they give an increased percentage. There are many factors which go in to the calculation of COLA. and its always calulated on the spendable portion of your salary and not calculated on the gross income. 

Say for eg, your salary is 10 Lakhs INR per annum then it is assumed that you would be spending 70 % of the same ( 7 Lakhs ) balance goes towards saving. Now on the 7 lakhs , COLA is calculated and given to you in UK inorder to enable you to have the right purchasing power.

Regards, Sahana





RShak said:


> I just had a few questions about Cost of Living Allowance in England? Kind of lost, I found a few different answers online but I was just curious about what it is all about. thanks.


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## RShak (May 4, 2009)

Thanks that is very informative, but I still don't understand everything, when you did move to the UK from another Country, would you not get a job that pays normal for UK standards, so you would not need COLA? or do they give it to you for just moving there?


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## sahana_kumar (Apr 22, 2009)

Yes, you are right. Salaries are calculated in two ways. One is called the Local Net approach. and the other is build up approach.

I just answered your query of COLA.

Now coming to your below query. When some body is moving from Low Cost to High Cost Country eg. India to UK, then the salary is calculated on Local Net Approach, which means , he would be paid equivalent to local terms. where COLA / TP ( Territorial Premium ) is not given.

However when some one is moving on a Build up approach due to high salaries in the home country and if the COLA index is more than 100 , then he would be eligible to receive a COLA percentage.

A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves

Employees who are being permanently relocated are less likely to receive such allowances, but may receive a base salary adjustment to reflect local market conditions. 

A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index. Salaries are typically adjusted annually.


Hope this clarifies

Sahana




RShak said:


> Thanks that is very informative, but I still don't understand everything, when you did move to the UK from another Country, would you not get a job that pays normal for UK standards, so you would not need COLA? or do they give it to you for just moving there?


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## Suenneil (Feb 17, 2009)

RShak said:


> Thanks that is very informative, but I still don't understand everything, when you did move to the UK from another Country, would you not get a job that pays normal for UK standards, so you would not need COLA? or do they give it to you for just moving there?


Hi ... I think part of the question you are asking is would you not get a job that pays normal for UK standards, so you would not need COLA? or do they give it to you for just moving there?[/QUOTE] ....

The point is if you are being relocated by your current company from India to the UK, your company will compensate you by paying you a higher salary to help meet the cost of living in the uk. HOWEVER if you are thinking of moving to the UK without being relocated by your existing employer then of course you need to find a job in the UK, and the salaries in the UK will be higher than the equivalent job in India....


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