Reserve Participation and Cost Under a New Approach to Reserve Compensation

Abstract : Every four years, the Department of Defense (DoD) conducts a Quadrennial Review of Military Compensation (QRMC). One issue considered in the 11th QRMC, which began in 2010, is ensuring that the pay and benefits of Reserve Component (RC) membersare consistent with the current and planned use of RC personnel in an operational capacity. The 11th QRMC proposes a new approach to compensating RC members, a total-force approach, in which RC compensation is more closely aligned with the approach used to compensate Active Component (AC) members. The total-force compensation approach has four elements: Regular military compensation (RMC) based on days of reserve service, regardless of duty status. RMC includes basic pay, allowances for housing and subsistence, and a tax advantage (allowances are not subject to taxation). Currently, RC members receive different pay levels depending on duty status. Under the total-force approach, they would receive a day of RMC for each day of duty, computed in the same way that active RMC is computed. 53 RC retirement points, one for each day of service, regardless of duty status. In the existing system, RC members accumulate 75 points per year of participation under the model used in this assessment, while under the proposed system RC members accumulate 53 points for 53 days of service. Retirement eligibility after 30 years of service (YOS), RC members who have attained 20 qualifying years for retirement benefits can begin receiving benefits on accumulating 10 additional years in the selected, individual ready, or retired reserve, or at age 60, whichever occurs first. Thus an individual could collect reserve retirement benefits within 30 years of starting service. Currently, RC retirement benefits begin at age 60; under the total-force approach, benefits might begin up to 13 years earlier for some individuals.