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Military Pay Increases, Concurrent Receipt Changes Highlights of 2004 Act

By Sgt. 1st Class Doug Sample, USA
National Guard Bureau

WASHINGTON, Dec. 9, 2003 – Editors note: This is a resend of a story originally posted Dec. 8, "Defense Department Targets Military Pay Increases for 2004." This version contains additional information about changes to concurrent receipt.

Military personnel will see their basic pay more in line with that of civilian counterparts in the private sector in 2004 thanks to an increased pay and benefits compensation package included in the 2004 Defense Authorization Act approved by Congress this year. The act also includes changes to the controversial "concurrent receipt" issue.

Air Force Col. Virginia S. Penrod, director of military compensation for the Defense Department, said the 2004 military pay and benefits plan provides for a 3.7 percent across-the-board pay increase and further targets pay increases for noncommissioned officers and warrant officers, some as high as 6.25 percent for senior-enlisted service members.

In addition, service members will see 2004 increases in housing allowances and special incentive pay.

Penrod said the average basic pay raise, which is equal to a little over 4 percent, helps to close the gap between military pay and civilian pay.

"Everyone receives a 3.7 percent pay raise across the board, this is by law," she said, adding that the pay raise is a half percentage point more than the average private sector worker will earn. "The NCOs, E-5 through E-9, will receive targeted pay raises from 4.6 to 6.25 percent. And we're also paying a targeted raise to our warrant officer grades."

Penrod also noted that part of the pay incentive is to help retain senior noncommissioned officers. The highest pay raises, 6.25 percent, will go to E-9s with 26 years or more service.

"This (raise) recognizes the contribution of our senior noncommissioned officers and our career enlisted force," Penrod explained. "All NCOs will receive some form of a targeted raise, and the pay increases as the grade increases. So it's an incentive to continue in the military and to pursue higher rank."

The act also provides for full concurrent receipt of military retired pay and Department of Veterans Affairs disability pay for those retirees with more than 20 years of service and who had received a Purple Heart medal. Currently military retirement pay is reduced by the amount of disability pay received from VA.

Additionally, concurrent receipt will be phased in over the next 10 years for a second group of retirees, those who have received at least a 50 percent disability rating from VA. Penrod said that beginning in 2004, those retirees will receive an increased portion of the "off-set" to their retirement pay. "And by 2014, the (retiree with 50 percent or higher disability rating) will have the full concurrent receipt," she said.

Other retirees may benefit from a change to Combat-Related Special Compensation, which DoD currently pays to retirees with a 60 percent or higher disability rating that stems from injuries received in combat or training for combat. This special payment was designed as a compromise on the concurrent receipt issue. The 2004 Authorization Act provides for this payment to go to all retirees with a disability related to combat or combat training, regardless of the percentage of disability.

Also included in the package is an average increase of almost 8 percent for military basic allowance for housing -- money given to military personnel to help defray the cost of housing expenses.

Penrod said the increase is part of the Defense Department's effort to reduce -- and eventually eliminate -- out-of-pocket expenses for military personnel, which Pentagon officials hope to do by fiscal 2005.

"When BAH was enacted, housing allowances amounted to 80 percent of housing costs, this left the service member with 20 percent out-of-pocket cost," she said. "In fiscal year 2000, the secretary of defense committed the department to reduce these out-of-pocket expenses to zero by 2005. And we're on track to do this."

She said that the average out-of-pocket expense for housing is down to about 3.5 percent for January 2004 and "should be at zero in 2005."

"If you talk to a service member today, compared to their compensation package ten years ago they are very pleased," Penrod said. "The housing (allowance) increase has been absolutely the right benefit at the right time. It shows we do value their commitment to the military and what they do for the country."

Another area of increased pay will be special and incentive pay, such as imminent danger pay and family separation pay.

Penrod explained those pay increases were made possible in part due to President Bush's supplemental funding request this year. That request authorized funding for increases in imminent danger pay from $150 to $225 per month, as well as an increase in the family separation pay and support allowance from $100 to $250 per month.

Other new measures in the 2004 compensation package allow for services to offer incentive pay to get officers to extend overseas tours. "Previously this was only offered to enlisted members," Penrod explained.

She said the compensation policy has two principal thrusts, the first of which is to have an overall level of military compensation that is at least equal to the 70th percentile of the pay of civilians with comparable levels of education. The other is to target special and incentive pays and bonuses to address retention problems that are specific to various occupations and recruitment problems.

In summing up the new compensation package, Penrod said that DoD is sending the message that it remains committed to the preservation of a compensation and benefit structure that will provide members with a suitable and secure standard of living and that will sustain a trained, experienced and ready force in the future.


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