Very few military members remain on active duty long enough to earn a military pension. The latest numbers show that only about 17% of servicemembers reach the full 20 years required for an active duty pension. It’s a wonderful achievement and a testament to the hard work and dedication it takes to make a career of the military.
That’s why it’s disheartening to read about certain service members who are being forced out of the military due to Force Shaping. It’s difficult for anyone who is forced out of the military, particularly when they have chosen to make it a career.
Some military members are being forced to retire early under the TERA program. This is unfortunate, as many retirees under TERA wish to complete their full 20 years of service and receive their full pension (retirees under TERA take a reduced pension equal to the number of years served * 2.5%, times a reduction factor based on the number of years they retired early).
But there is one class of servicemembers who arguably have it worse than others: some officers are being forced to retire from the military, but they don’t have the minimum service time to retire as an officer.
Rules for Retiring as an Officer
The normal rules require military members to serve 10 years as an officer to be able to retire as an officer. However, due to Force Shaping, there is currently an exception written into Title 10 of the US Code (the law that governs military pay and benefits), that allows service members with only 8 years of service as an officer to retire as an officer. Here are the applicable laws (note: these showcase the Army laws, as this is affecting more Army members than other services; the laws for the other services are similar):
- Title 10 U.S. Code section 1370: “a commissioned officer […] will “be retired in the highest grade in which he served on active duty satisfactorily, as determined by the Secretary of the military department concerned, for not less than six months.”
- Title 10 U.S. Code section 3911: “the Secretary of the Army may, upon the officer’s request, retire a regular or reserve commissioned officer of the Army who has at least 20 years of service computed under section 3926 of this title, at least 10 years of which have been active service as a commissioned officer.”
- Title 10 U.S. Code section 3911: “The Secretary of Defense may authorize the Secretary of the Army, during the period specified in paragraph (2), to reduce the requirement under subsection (a) for at least 10 years of active service as a commissioned officer to a period (determined by the Secretary of the Army) of not less than eight years.”
But there are many officers being let go just shy of the required 8 years. In some cases, officers are allowed to get a waiver to extend their service up to 60 days or so to reach the required service time. But others aren’t so lucky, and are being forced from the service just short of reaching the requirement time served to retire as an officer. In fact, some of them are just months shy of reaching the required 8 years.
And the difference is huge.
Impact on Retirement
There are two major impacts on retirement. The first, is these servicemembers retire as enlisted members, not officers. Their paperwork and retiree cards will be in the enlisted ranks. The other impact is to retirement pay.
The immediate impact on the pension is obvious – these soon-to-be-retirees will be earning substantially less in their retirement checks than they would have had they been able to serve an additional year or two. I’ll give an example in just a moment. But here is the worst part: these servicemembers’ pensions will be paid based on their previous enlisted pay.
Using High-3 rules, you have to go back to their highest three years of pay at their enlisted ranks. So not only do you have to take away their Officer Pay as though it never happened, these servicemembers’ pensions will be based on old pay scales at their previous rank. To add insult to injury, these servicemembers are artificially held at their last pay grade. So someone who served as an E-7 is forever an E-7 for pay and retirement purposes, even if they became a Captain.
Let that sink in a moment. These servicemembers didn’t have the same opportunities for promotion through the enlisted ranks. Its very possible many of these officers would have been able to promote one or two times as an enlisted member. Some of them may have been able to max out their pay scale and become E-9’s. But they weren’t given that opportunity.
Reduced Pension for Enlisted Vs. Officer:
Here is a sample based on an E-7 pay grade and O-3E at 20 years service (7 as an officer)*.
- Enlisted Base Pay (E-7, 18-20 years service): $4,323.90
- Enlisted Retirement: $2,161.95
- Officer Base Pay (O3-E, 18-20 years service): $6,726.00
- Officer Retirement: $3,363.00
- Difference: $1,201.05 per month
As you can see, there is a large difference – an approximate cut of 35%.
*These numbers are actually rough estimates. High-3 rules average the pay for the last 3 years of service at the highest grade held. So it would be an average of these salaries and the preceding two years.
The primary benefit these servicemembers received for being officers was increased pay while they were officers (increased base pay and BAH, however they had reduced BAS and were required to pay for all uniforms out of pocket).
Additional Reading on This Topic
Being forced out of the military is difficult for anyone, regardless of how long you served. There are many who are lucky, and are simply able to retire with full benefits, even if they were forced to retire earlier than they wished. Others may have to retire with a reduced pension under TERA rules. And then there are the unlucky few who rose from the enlisted ranks, answered the call to become an officer, and were later forced out before they could retire as an officer. This is an unfortunate situation, and unfortunately, one I don’t have answers for.
Here are some additional articles about this topic:
- New York Times: Army Cuts Hit Officers Hard, Especially Ones Up From Ranks.
- The Military Guide: Ask the Readers: What Law Allows an Officer to be Retired on Enlisted Pay?
- Stars & Stripes: Report: Army officer cuts disproportionately affect prior enlisted.