Drill Pay Overhaul Proposal – Big Changes Coming for Guard and Reserves?

The military is continually looking at ways to stretch its budget, and one of the largest expenses is personnel – including pay, benefits, and the cost of supporting personnel through deployments, permanent changes of station, training, and facilities. Two of the major areas the military is looking to save money is by overhauling the military retirement system for active duty military, and by overhauling Guard and Reserves drill pay.

National Guard and Reserve Drill Pay changes coming?Military pay and benefits represent a huge portion of the defense budget each year. This figures to continue over the coming decades are the cost of paying for retirees continues to increase at a rapid rate.  The major concerns center around the cost of retiree and dependent health care which continue to increase, along with the increases in retiree pensions through the Cost of Living Adjustments (COLA).

As we mentioned, the military is looking at changing the active duty retirement system, but they are also taking a strong look at changing the National Guard and Military Reserve pay and retirement system, starting with the possibility of slashing drill pay and retirement points across the board – but it’s not all doom and gloom. In fact, there could be some benefits to a reduction in how drill and retirement points are calculated.

Will the Military Overhaul Guard and Reserve Drill Pay?

Congress has commissioned a study, the 11th Quadrennial Review of Military Compensation (QRMC), to look at ways to reduce long term expenses, and one of the aspects they are studying is Reserve and National Guard pay and benefits. One of the recommendations is reducing the number of drill pay days and annual retirement points awarded to Guard/Reserve members, in exchange for starting retirement pay earlier than age 60, as current law dictates. From the report:

The QRMC recommended modernizing the reserve compensation system by transitioning the reserve components to a total force pay structure under which a member receives full pay and allowances for each day of duty regardless of the type or purpose of duty.  Further, the QRMC recommended transitioning the reserve components to a retirement system that is more closely aligned with the active duty system with guard and reserve members receiving retired pay upon reaching their 30th anniversary of military service, having completed 20 qualifying years.





Let’s break this down: Basically, the QRMC wants to simplify how Guard and Reserve members are compensated, including how they earn drill pay and retirement points.

Current law compensates members of the Reserve Component (Guard and Reserve members) for 4 days salary and 4 Drill Points per drill weekend (2 working days). In addition, Reserve Component members can earn 14 points for the two weeks they serve per year, and 15 participation points per year. In most cases, Guard and Reserve members earn around 75 retirement points per good year of participation, not counting any additional active duty time they may incur.

The proposal would limit members of the Reserve Components to a total of 53 retirement points per year – one point for each weekend drill day, 14 points for the two weeks of summer training, and 15 annual participation points. Instead of paying members of the Reserve Component for 4 days of service per weekend drill, Guard and Reserve members would receive the same pay and benefits as active duty personnel, regardless of their status. This would simplify the pay system, but have the net effect of reducing the number of retirement points Guard and Reserve members could earn in any given year.

In exchange, the board proposes to allow retirees from the Reserve Component to begin receiving retirement pay 30 years from the date they began military service, or age 60, whichever comes first. In this example, and enlisted person who joined at age 18 out of high school could begin receiving retirement pay at age 48 (30 years after joining the service), provided they have completed their 20 years of service.

Thoughts on this Proposal

Members of the Guard and Reserve have a complicated pay system that rewards them more for drill weekends than working on active duty status. Additionally, members who are activated for less than 30 days earn less than their active duty counterparts, while members who are activated for 31 days or longer are compensated at the same rate as their active duty counterparts. There are several other factors affecting Guard and Reserve pay which can complicate matters (including the purpose of activation, duration of activation, etc.).

The purpose of this proposal is to simplify Reserve Component pay, eliminating much of the confusion, and putting Guard and Reserve members on equal footing with their active duty counterparts. In exchange for being awarded fewer retirement points per year, members of the Reserves and National Guard would be able to receive their retirement benefits much earlier than the current standards allow – 30 years from the date they entered military service, or age 60, whichever comes first.

Guard and Reserve members have long wanted retirement pay and benefits to start before age 60, though not at the expense of cutting drill pay and retirement points. But in the long run, this proposal is not a huge detriment to total compensation, depending on the situation of the service member. (see page 154 of the report for some examples).




Who will this affect? Keep in mind this is just a proposal, and not law. If enacted, there are two options – one which would grandfather all Guard and Reserve members into the old system, and an option that would grandfather those with 18 years of service or more, and move everyone else into the new system. Those who are grandfathered into the old system would continue earning their points and pay as they previously have.

My thoughts. I read through chapters 6-8 of the report (the sections which pertain to the Guard and Reserves), and overall, this appears to be a positive proposal for many Guard and Reserve members. Each situation will be unique, of course, and those who have been in the Guard or Reserves with a lot of service time may be better off under the old system. But others would do better under the proposed changes. Though members would end up earning fewer retirement points and lower pay while they are serving, many members serving in the Reserve Component would be able to retire much sooner than they otherwise would, giving them many additional years of retirement pay and benefits.

Though I didn’t specifically read this in the report, it appears as though the retirement that starts at 30 years after entering the service would be full retirement with the pension based on retirement points, grade, and time in service, and with health care. (someone please chime in with a comment if health care is not included until age 60). If the earlier retirement option includes health care starting at 30 years from entering the service, then this is a great deal for many prior service members and others who would be able to begin receiving TRICARE at a much earlier age. For many Guard and Reserve members, TRICARE is more valuable in the long run than the actual pension they receive, and starting this earlier would be a huge benefit.

The full report is 290 pages long, and can be found here (pdf).

What are your thoughts on these proposed changes?

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Date published: July 16, 2012. Last updated: July 18, 2012.

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Ryan Guina is the founder and editor of this site. He is a writer, small business owner, and entrepreneur. He served over 6 years in the USAF and also writes about money management, small business, and career topics at Cash Money Life. You can also see his profile on Google

Comments

  1. Arthur Losher says:

    Not bad. I think it is a good trade off

  2. Mike McCulley says:

    So what will make a good year?
    Is it still going to be 50 points as it is now?
    50 points would leave little room for error, or schedule changes.
    It should probably go down as well, perhaps 39 points.

    • Great question, Mike – the proposal states a good year would now be 35 points (bottom of page 152). That is just covered by the standard “one weekend a month, two weeks a year” requirement. The 15 participation points allow participants to earn up to 53 retirement points per year.

  3. The retirement with healthcare would change the total value of the proposal, however a Reserve soldier with 20 years limited to 53 points means only 1060 points to be used for retirement… as a retired reservist with 3 deployments (not unusual) I earned over 3000 points used in calculating my retirement which at 20-30 cents per points – even though not recieved till age 60- adds up to a better retirement. Given the demands, I am troubled to thing the value of the total work, G&C (God and Country) time and would be reduced for the 20 years it takes to earn any retirement. (17% of soldiers actually make it to retirement)

    • I agree – 20 years of service at the minimum of 53 retirement points per year wouldn’t not add up to a great pension. But as you noted, you had 3 deployments, which is not uncommon for Guard and Reserve members over the last decade. Many units also offer opportunities to activate for longer periods throughout the year, though these may not apply across the board.

      If these changes are enacted, it is likely they would act more as a retention tool for active duty members who have served at least half of their 20 years, but who decide they want to transition to the civilian world. It can be difficult to “give up” 12-15 years of service when you are so close to retirement, even knowing that you can join the Reserve Component and receive a pension and retirement at age 60. For many people, finishing up on active duty is a much better deal. But if servicemembers were given an option of joining the RC knowing their active duty points would count and they could still receive a pension and health care benefits 30 years from the date they entered military service, they might be more inclined to remain in the service in the Guard or Reserves.

      In other words, this wouldn’t be a great deal for those who joined the Guard or Reserves without prior service, as it would be difficult for them to accrue a meaningful number of retirement points. But it could be a great incentive to entice prior service members to remain in the military in some capacity through retirement.

  4. Steve Wacksman says:

    I’m a retired USAF Lt Col, with 11 years AD and a total of 23 years service. I’m 50 now. I haven’t really seen anything that addresses people like me–those who have retired, but haven’t reached 60. Personally, I would like to draw benefits at 30 years vs. age 60, even if I had to give back some points. To me, it’s like choosing to draw SS early. Hey, you never know if you’ll even make it to 60! And for me, and others like me, who earned the bulk of their points on AD, if I had to give back some of my IDT points it wouldn’t have a major impact on my pay. Do you think there will be a provision allowing people like me an option to stick to the old plan or go with the new plan?

    • Hello Lt. Col Wacksman, From what I’ve read, this proposal doesn’t address those who have already met the 20 years of service and have retired. The proposal also had two recommendations for implementation which would either: 1) grandfather those with 18 years of service into the current system, and transfer all others into the new system or 2) grandfather all current troops into the current system.

      I agree with your assessment – it would be much more beneficial for many people to have the option to receive benefits earlier, even if it cost them some retirement points. However, I haven’t seen it addressed anywhere.

  5. I am opposed to this proposed pay cut. I have 9 years until I can retire at which time I will be 53. I will not benefit from collecting early retirement unless they let me use my original enlistment year of 1989 (I had a 12 year break in service). If that’s the case then I could collect upon retirement but I highly doubt it would work that way. I’m currently being placed in an E7 slot within my unit where I am being lined up to take over as a shop supervisor. This requires twice as much work both on and off drill weekends. I will not be motivated to do this job at half the pay and at a reduced pension rate which I will have to wait till I am 60 to collect anyway. I may as well defer to one of the younger troops and pass up a promotion opportunity. If this were to pass I would want either the option to collect retirement based on my original enlistment date (which would allow me to collect upon retirement) or the option for a 10 year retirement (which has been proposed by similar studies) so I can retire now. If neither is an option for me then what incentive do I have to take on more responsibility, or to even stay in the reserve, under those changes?

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