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Congress Approves Retirements at 15 years

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  • Congress Approves Retirements at 15 years

    In this week's Army Times

    15 years & out Congress pushes early retirement, other drawdown incentives

    By Rick Maze

    Congress has approved 15-year retirements and other voluntary separation tools to help the ser*vices manage potential deep cuts to troop levels.

    Concerned that the Defense Department and services are ill*prepared for potential force cuts of 10 percent or more over the next five years, lawmakers are erecting a four-part safety net to protect career troops from getting cut loose without benefits.

    The defense authorization bill, passed by Congress on Dec. 15 and on its way to President Obama for his signature, revives three tools last used in the 1990s post-Cold War drawdown, when the force was cut by one-third, and extends a fourth tool that has been autho*rized since 2006. They are: ■ Early retired pay, known as temporary early retirement

    authority or TERA, for members with as few as 15 years of service.

    ■ Voluntary retirement incentive pay that could equal up to one year of basic pay for officers with between 20 and 29 years of service.

    ■ Voluntary separation pay for officers and enlisted members with six to 20 years of service.

    ■ Early release from active duty for enlisted members.

    The law would keep these tools on the books through 2018.

    The $662.4 billion bill also includes some landmark provi*sions that will give the National Guard a seat on the Joint Chiefs of Staff; cap annual increases in Tri*care Prime health coverage for retirees; and strengthen sexual abuse prevention programs.

    Preparing for the worst

    Drawdown tools included in the bill are aimed at a situation that has not yet arrived, because the bill calls for very modest cuts in personnel end strength next year. The tools are designed to address what might happen in 2013 and beyond.

    “When we talk to the ser*vices, they don’t seem to be planning for the possibility of big defense cuts,” said a House aide who worked on the compromise and spoke on condi*tion of anonymity. “They don’t believe the cuts are going to hap*pen, which we see as very short*sighted because things are a lot less rosy than they seem to think.” The Pentagon already is wrestling with how to reduce planned defense spending by $465 billion over the next 10 years. On top of that, another reduction of $500 billion to $600 billion is looming because of sequestration — automatic, across-the-board cuts that are due to start in 2013 because Congress failed to come up with an alternative plan to cut the federal deficit by at least $1.6 trillion. But even if sequestration is avoided, the defense budget could still face deep cuts.

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    Congress to exempt the Pentagon from budget cuts beyond the initial $465 billion, but Obama has vowed to veto such legislation.

    “It seems like people in the Pentagon who ought to be figuring out how to live with a much smaller budget believe they are not going to be cut,” said a Senate aide who also spoke on condition of anonymity. “We are not so optimistic. If cuts happen and the military isn’t ready, it’s the service members who are going to be hurt.”

    Will the tools be used?

    At this early point, there is no indication that any of the services plan to offer early retirement to anyone, congressional aides said, although the services universally supported restoring authority for the program that was heavily used in the 1990s and stayed on the books until 2001.

    In late 2000, at the tail end of the drawdown, about 54,000 people were drawing retirement pay under TERA.

    As approved in the 2012 bill, the formula for early retired pay would be the same used in 1993. TERA pay would be calculated the same as traditional retired pay — 2.5 percent of basic pay for each year of service — but with a penalty of 1 percentage point for each year short of 20 years.

    One difference: The 1993 plan allowed early retirees to boost their retired pay if they worked in community and public service jobs after leaving the military. That extra credit for post-service work is not part of the 2012 bill.

    Early retirement is a way to quickly cut relatively expensive midcareer people while still providing a monthly retirement check and retiree health care benefits, which cushion the blow of shortened careers.

    The 2012 bill also includes voluntary retirement incentives of up to one year of basic pay for officers with 20 to 29 years of service who have a year or more remaining before they could retire at their current paygrade and a year or more before reaching mandatory retirement age for their grade.

    Eligibility could be based on years of service, grade, military specialty or a combination of these factors. The incentive would be available to a maximum of 675 officers.

    The Defense Department specifically requested the extension of VSP and the expanded early-outs for enlisted members.

    Voluntary separation pay, which was due to expire at the end of 2012, is extended through 2018 and will remain available to all services for both officers and enlisted members. VSP is an incentive for people with at least six but fewer than 20 years of service to leave voluntarily rather than be forced out.

    Payment rates can be up to four times the amount of involuntary separation pay, which currently ranges from $14,040 for an E-3 with six years of service to $169,075 for an O-5 with 18 years of service.

    However, the services can pay VSP at lesser rates. For example, the Air Force, which has been using VSP this year, has been capping payments at about 1½ times the involuntary separation pay rates.

    Early discharges for enlisted members, currently allowed within three months of the end of an obligation, would be allowed within one year. Anyone getting out early still would be eligible for any post-service benefits that they would have received for full service but would not receive any military pay or allowances for the forfeited period of service.