Committee Reviewing Military Compensation System
By Kathleen T. Rhem
American Forces Press Service
WASHINGTON, May 25, 2006 A yearlong review of total military compensation could eventually result in streamlined allowances and a fundamental shift in thinking on how the uniformed services pay members and retirees.
The war on terrorism "focuses our efforts in ensuring we do the right things by the folks we are deploying," retired Air Force Brig. Gen. Jan D. "Denny" Eakle said in an interview yesterday.
Eakle heads the 10th Quadrennial Review of Military Compensation, which got under way April 1. This review will focus on five main areas:
- Ensuring the compensation system supports an adequate supply of military personnel with the abilities and experience to meet national security objectives;
- Maintaining quality of life for military personnel and their families;
- Re-evaluating special and incentive pays to enhance service flexibility;
- Assessing the need for more flexible recruiting and retention authorities; and
- Reviewing the retirement system.
One of the most dramatic issues being looked at has to do with how the department figures active vs. retired pay. "Today we have a compensation system that provides an awful lot of deferred compensation, compensation to those who have served, those who are retirees," Eakle said.
She noted that employees are "vested" in their retirement programs at five years in most civilian corporations. However, military retirees generally must serve 20 years before being eligible for any percentage of retired pay.
"The balance between the deferred compensation and the current compensation, the compensation being paid to those who are currently in places in harm's way, is very different than you would see in other compensation systems," Eakle said. "I believe that the war on terror has focused our efforts on making sure that we are taking care of today's servicemen and women."
The recently concluded Defense Advisory Committee on Military Compensation recommended in February that members be vested at 10 rather than 20 years and that retirement payments be graduated ranging from 25 percent of base pay at 10 years to 100 percent of base pay at 40 years. The group also recommended that the government contribute 5 to 10 percent of base pay to military members' Thrift Savings Plans, as is the case for federal civilians.
This committee's recommendations serve as a starting point for the quadrennial review. Eakle explained that the purpose of her review is now to take these recommendations and look at their implications on the ability of the services to recruit and retain personnel and to further develop them to enable them to be effective for the services.
She said any recommendations would be implemented "several years" in the future because it would take time to work out details and, in some cases, legislation would need to be changed.
"No current retiree or current military member would be affected by the changes ... we may recommend," she said. "But you could end up with a system where there would be less in the retired pay because we would bring it forward and pay it to the individual while they are serving."
She also said any such shift away from deferred compensation would be accompanied by initiatives to better educate servicemembers on financial planning for retirement.
Another change that would come out of the quadrennial review is simplifying the vast and confusing system of special pays and allowances military members are entitled to under various circumstances. Eakle said this system of more than 60 different pays and allowances accounts for no more than 5 percent of total compensation but are labor-intensive to manage and track. It also makes it difficult for servicemembers to effectively monitor that they are receiving correct pay and allowances.
"If we make them simpler, we will reduce the management requirements for watching so many pays, ... and the member would have a better understanding of what they are entitled to," she said.
The quadrennial review takes into account unique recruiting and retention challenges for each of the seven uniformed services. In addition to Defense Department service branches, the review's recommendations will apply to the Coast Guard, in the Department of Homeland Security; the commissioned corps of the National Oceanic and Atmospheric Administration, in the Department of Commerce; and the commissioned corps of the Public Health Service, in the Department of Health and Human Services.
"The pay regulations that apply to the Department of Defense and the Coast Guard apply to those two services as well," Eakle said.
The ninth Quadrennial Review of Military Compensation, completed in 2002, recognized that the modern force is more educated than in the past and that current pay doesn't include a premium high enough to retain this more educated force. A large pay raise targeted toward mid-grade enlisted members and junior officers came about because of this realization.