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DoD Proposes Largest Military Pay Hike in Generation

By Jim Garamone
American Forces Press Service

WASHINGTON, Dec. 22, 1998 – An across the board pay raise, a targeted pay raise and a return to a retirement plan that pays 50 percent of base pay at 20 years are the three key elements of a compensation plan for service members.

The compensation plan -- announced by Defense Secretary William S. Cohen and Army Gen. Henry Shelton, chairman of the Joint Chiefs of Staff, during a press conference at the Pentagon Dec. 21 -- will be part of the President’s fiscal 2000 budget.

 

The across the board pay raise is pegged at 4.4 percent and will take effect Jan. 1, 2000. Pay raises for the “outyears” of the budget -- through 2005 -- are tentatively set for 3.9 percent. “The increase is the largest in basic military pay in nearly a generation,” Cohen said. “It compensates our service members adequately and fairly.”

 

Civilian workers will receive the same increase.

 

The targeted pay raise is aimed at mid-level NCOs and mid-level officers. Raises call for an additional .5 percent to 5.5 percent taking effect July 1, 2000. If approved, one million service members will get a targeted raise, Pentagon officials said. These are the most highly trained personnel and the most attractive to private industry.

 

A senior defense official also called the targeted pay raise “pay table reform.” He said the officer pay table is the “most out of whack” with only 37 percent of raises over a career coming from promotions and the rest through longevity. “The preponderance [of new targeted raises] are based on merit, performance, promotion versus just simply being in the service for long periods of time,” said the official.

 

Shelton said the revision in pay tables would reward the “fast burners.” “If you take one of our great staff sergeants [E-6] that has eight years of service, you’ll find that one of his subordinates, who may be a sergeant, an E-5 pay grade, who has 14 years of service, makes as much or more than he does,” Shelton said.

 

Cohen said this would allow DoD to do a better job in highlighting performance and rewarding service members for their skills, education, experience and leadership abilities.

 

The third part of the compensation package will change the current retirement system. Cohen said during his travels around the military, service members tell him the current “redux” retirement system, which came into effect on Aug. 1, 1986, is perceived as unfair. The previous retirement system provided 50 percent of base pay if a service member retired with 20 years in the military. Under redux, service members retiring after 20 years receive 40 percent of their base pay. Many mid-level service members who leave the service cite redux as one of the primary reasons for not staying. “We are committed to returning 20-year retirement to 50 percent of base pay,” Cohen said.

 

A senior defense official said this package has been endorsed by the White House and the Office of Management and Budget. "The Defense budget I will submit to Congress for next year will include a pay raise of 4.4 percent for 2000, a restructuring of pay to reward performance as well as length of service, and an increase in retirement  benefits," President Clinton said in a written statement.

 

Cohen said the message service members should get from the compensation package is that DoD has heard their concerns  and will act on them. “We believe this package will be fair  and effective,” Cohen said. “We must compensate men and women in uniform properly in relation to their peers and in relation to the larger economy.”

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