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1 1 (November 20, 2020)

handle is hein.crs/govdcqw0001 and id is 1 raw text is: 01; tesctrch 3 Defense Primer: Military Retirei The military retirement system is a government-funded system that provides a defined benefit to all retirees and matching government contributions to the Thrift Savings Plan (TSP) for eligible servicemembers. It has historically been viewed as a significant retention incentive for military personnel. The system includes monthly compensation for qualified active and reserve retirees, disability benefits for those deemed medically unfit to serve, and a survivor annuity program for the eligible survivors of deceased retirees. The amount of compensation depends on years of service (YOS), basic pay at retirement, and annual Cost-of- Living-Adjustments (COLAs). Wh,at is t §xheP e of the Military The non-disability military retirement system for active- duty members has evolved since the late 1800s to meet four main goals. * To keep the military forces of the United States young and vigorous and ensure promotion opportunities for younger members. * To enable the armed forces to remain competitive with private-sector employers and the federal Civil Service. * To provide a reserve pool of experienced military manpower as a retired reserve that can be recalled to active duty in time of war or national emergency. * To provide economic security for former members of the armed forces during their old age. Wh~o is ElgbefrRetred Pay? Eligibility for non-disability retired pay depends on years of service (YOS). In order to be vested in the defined benefit, a member must complete 20 years of qualifying service. For active component members this is one calendar year, and for reserve component members, it is a year in which the member earns at least 50 retirement points, typically through weekend drill. Servicemembers determined to be unfit for continued service and who have a permanent and stable disqualifying physical condition may qualify for disability retirement, commonly referred to as a Chapter 61 retirement. Eligibility is based on having a permanent and stable disability of 30% or more that was not noted at the time of entrance on active duty. As a result, these members might retire without having reached the 20-year mark. How is Regular Retired Pay Czakuated? Retirement pay calculations for active-duty personnel are based on the date when the servicemember first entered on active duty, the pay base at the time of retirement, and a multiplier as defined by statute. Changes in law have created four distinct systems for calculating retired pay: (1) Final Basic Pay, (2) High-Three, (3) Redux, and (4) Updated November 20, 2020 nent Blended Retirement System. Currently the pay base is either the final pay at retirement or average of the highest three years (36 months) of basic pay. With the exception of those opting into the Redux system, the multiplier for current retirees is 2.5%. For those entering service on January 1, 2018, the multiplier will be 2%. The basic formula for calculating retired pay is: YOS x multiplierx retired pay base For a member who retired in 2017 with 20 YOS, retired pay is 50% of the average of the individual's highest 36 months of pay. If another member with 30 YOS retired in 2017, retired pay is 75% of the high-three average. A servicemember who entered service in 2018 and retires in 2038 with 20 YOS will receive 40% of the high-three average and one who retires with 30 YOS in 2048 will receive 60% of the high-three average. How is Dmabiky rdPay A servicemember retired for disability may select one of two options for calculating their monthly retired pay; (1) the longevity formula for regular retirement: YOS x multiplier x retired pay base. Or, (2) the disability formula: DOD disability percentage x retired pay base. The maximum retired pay calculation under the disability formula cannot exceed 75% of basic pay. Figure I. Retirement System Eligibility Servkcemember eligibility -.. . . . . . . . . . . . . . . . . . . . . ..............t ... ................. .. . . . . .. . . . . . .. . . . . . .. . . . . .. . . . . . .. . . . . . ... .. .. ... .. .. .. ... .. .. .. .. . . . .. . . . .. . . . .. . . . j t1 ... ... ... ... ... ... ... ... ... .. .. .. .. .. .. .. .. .. .. .. .. Retirement systems NO \N R Im - - - ----------- INE Source: CRS Report RL3475 1, Military Retirement: Background and Recent Developments, by Kristy N. Kamarck * .....*.~ gnom ggmm , q a 'S

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