
333 S.E.2d 766 (1985)
William C. FRYKBERG
v.
Nancy C. FRYKBERG.
No. 8426DC1333.
Court of Appeals of North Carolina.
September 3, 1985.
*770 No counsel for plaintiff-appellee.
James, McElroy & Diehl, P.A. by William K. Diehl, Jr., Charlotte, for defendant-appellant.
HEDRICK, Chief Judge.
The central issue on this appeal is whether the court erred in treating the separation agreement as a court order, subject to modification, under the terms of the consent judgment entered 16 February 1981. For the reasons set forth below, we hold that the court erred in its ruling, and accordingly vacate in part the judgment entered.
Because of "great confusion" generated by the "dual consent judgment approach," our Supreme Court recently abolished the traditional distinction in domestic law between consent judgments in which *771 the court merely approves or sanctions a contractual agreement between the parties, and those in which the court adopts as its own, and thus incorporates into the judgment, the parties' agreement. Walters v. Walters, 307 N.C. 381, 386, 298 S.E.2d 338, 342 (1983). Prior to the Court's decision in Walters, a separation agreement that was not incorporated into the consent judgment was treated as a court-approved contract, rather than a judgment, and was thus modifiable only by consent of the parties or through other traditional contract channels. See Bunn v. Bunn, 262 N.C. 67, 136 S.E.2d 240 (1964); Levitch v. Levitch, 294 N.C. 437, 241 S.E.2d 506 (1978). Walters expressly overruled Bunn and Levitch, however, and held that "whenever the parties bring their separation agreements before the court for the court's approval," the agreement will thereafter be treated not as a contract but rather as a "court ordered judgment ... modifiable, and enforceable by the contempt powers of the court, in the same manner as any other judgment in a domestic relations case." Walters, 307 N.C. at 386, 298 S.E.2d at 342.
Were Walters applicable to the facts of the instant case, we would have no difficulty in affirming the order appealed from. The Court in Walters, however, expressly limited the application of the new rule adopted to that case "and all such judgments entered after this decision." Id. See also Doub v. Doub, 68 N.C.App. 718, 315 S.E.2d 732 (1984), modified and aff'd, 313 N.C. 169, 326 S.E.2d 259 (1985). Walters thus has no application in the instant case, in which the consent judgment was entered in 1981, and we must thus examine the court's order in light of the law prior to Walters.
We note at the outset that, under the clear terms of the 1981 consent judgment, the separation agreement was not incorporated into that judgment. Where a separation agreement is merely approved, rather than adopted, by the court under the terms of a consent judgment, it may not be modified or set aside by the court unless the parties consent. Bunn 262 N.C. at 69, 136 S.E.2d at 242. Thus the court erred in concluding that the provisions of the separation agreement regarding alimony were modifiable.
Defendant also assigns error to the court's conclusions that two provisions of the separation agreement were unenforceable and void as against public policy. We agree that the court erred in these conclusions, noting that the error in each case arose from Judge Sherrill's initial mischaracterization of the type of consent judgment before him.
In the first instance, the court concluded that the provision in the separation agreement that child support payments would increase automatically based on the Consumer Price Index was void because such automatic variations give no consideration to the means or abilities of the parties and the needs of the child. It was for precisely this reason that this Court, in Falls v. Falls, 52 N.C.App. 203, 278 S.E.2d 546, disc. rev. denied, 304 N.C. 390, 285 S.E.2d 831 (1981), refused to sustain a similar provision in a court order for child support. The Falls Court also said, however:
[W]e do not seek to discourage parties who, with a spirit of fairness and concern for their children, stipulate to a COLA formula for child support [since such a stipulation would seem to minimize] the risks of yearly resistance to increased support, with attendant legal expense and animosity.
Id. at 221, 278 S.E.2d at 558 (citation omitted). We thus hold that the provision for automatic increases in child support as a function of the Consumer Price Index, contained in the contractual agreement of the parties and not incorporated into the consent judgment, is not void as against public policy. Consequently, the court's calculation of arrearages owed by plaintiff to defendant, based on its holding that plaintiff's monthly child support obligation is in the amount of $300, is erroneous, and defendant is entitled to recover the full amount due under the terms of the separation agreement. Our holding in this regard *772 in no way affects or lessens the court's well-recognized inherent authority to modify the separation agreement upon a showing that such modification is necessary to insure protection of the interests and welfare of the minor child. McKaughn v. McKaughn, 29 N.C.App. 702, 225 S.E.2d 616 (1976).
The court also struck as void the provision in the separation agreement "which purports to `fix' alimony at $1,000 per month." In Rowe v. Rowe, 305 N.C. 177, 287 S.E.2d 840 (1982), the Supreme Court noted that, in consent judgments in which the court adopts the parties' agreement as its order, a provision which purports to prohibit modification of alimony obligations is void because it conflicts with the public policy of our State as set out in G.S. 50-16.9(a):
An order of a court of this State for alimony ... whether contested or entered by consent, may be modified ... at any time....
(Emphasis added.) In the instant case, however, the separation agreement provisions governing modification of alimony obligations never became part of a court order, and in no way do they offend public policy.
The result is: those portions of the judgment holding that the separation agreement is subject to modification by the court and striking as void as against public policy two provisions of that agreement are vacated; that part of the judgment awarding attorney fees, ordering plaintiff to pay defendant as alimony the amount of $1,000 per month, and that part of the judgment dismissing defendant's claim for reimbursement of tuition is affirmed; that part of the judgment ordering plaintiff to pay arrearages is affirmed; however, the cause is remanded to the district court for entry of an order requiring plaintiff to pay arrearages in the amount of $8,769.00, rather than $6,718.00.
Affirmed in part, vacated in part, and remanded.
ARNOLD and COZORT, JJ., concur.
