Military Drawdown Brings New Career, Pay, and Benefits Changes

I try to avoid posting breathless blow-by-blow accounts of every little detail of the legislative negotiations that go into the military drawdown and budget debates. However, there’s recently been some movement in these discussions, along with changes to guidance and benefits.

First, the House Armed Services Committee has started a bipartisan effort to restore some of the military’s budget cuts that were made earlier this year. The result is that the HASC is eight billion dollars over the spending cap of last year’s budget control legislation as they attempt to rebuild the military into a smaller peacetime force. However, the additional military funding would come from changes to the federal civil service retirement system and reduced funding for some unemployment programs.

MOAA reports that the HASC approved this FY13 defense bill late last week, including the following provisions:

  • A 1.7% military pay raise.
  • A five-year pilot program requiring Tricare For Life beneficiaries to refill maintenance medications through the mail order pharmacy.
  • Congress’ view that servicemembers pre-pay their retirement health care premiums through decades of service and sacrifice.
  • Transition benefits for involuntarily separated servicemembers, including six months’ extension in family housing and two years of commissary/exchange benefits.
  • 180 days of days of TRICARE Reserve Select health and dental insurance for members involuntarily separated from the Selected Reserve.
  • Extended refinancing help for qualifying servicemembers who can’t sell their homes in conjunction with a military-ordered relocation.

Although Congressional sentiment is attempting to provide more support to military servicemembers and families, the committees still need to shepherd their proposals through the full houses. The Senate Armed Services Committee will probably draft its version of the bill later this month, and the negotiations may not really begin until after the November elections.

In the meantime, the Navy is continuing its drawdown cuts through the Enlisted Retention Board. However, BUPERS NPC is still offering a Temporary Early Retirement Authorization to those who will reach at least 15 years of service before 1 September 2012. Sailors who were not retained by the ERB but who will qualify for TERA have to apply by 15 June (next month!) and must retire by 1 September. Of course, that’s not enough time for the transition process, let alone a search for a bridge career, but those retiring under TERA are still eligible for the extended transition benefits offered by the ERB. The smaller inflation-fighting TERA pension is almost always worth more than a large lump-sum involuntary separation payment.  If you’re eligible, that military retirement goes a long way to assuring lifetime financial independence.

Sailors who have already separated under the ERB process during 2012, but who would qualify for the TERA program, can petition the Board for Correction of Naval Records to have their involuntary separation revoked and approved as a retirement.

The TERA application process was updated last month, and an updated TERA FAQ discusses the details. (This link opens a Word document instead of a web page.) The Navy has also published the “reduction factors” used to calculate the exact amount of TERA retirement pay. TERA offers the same service multiple as a regular military retirement (2.5% for each year of service) but reduces retired pay by 1% for each year short of 20. The math challenge is that these calculations are actually in terms of months of service, with the number of months for the service multiple rounded down (the standard for regular military retirements) and the number of months of service for the reduction factor rounded up. This calculation produces a slightly smaller reduction factor and a few dollars more of monthly retired pay. The document includes the formula along with the reduction factors so that servicemembers can precisely determine their retirement pay and verify their calculations against the estimate provided by the Defense Finance and Accounting Service.

Along with ERB and TERA, the Navy is shifting some housing utility costs to its residents in Public Private Venture base neighborhoods. Although this requirement has been around for over a decade, construction and renovation of the housing finally includes electricity and fuel meters. Residents are permitted an average consumption amount as part of their housing allowance, they’re provided monthly utility bills, and they pay extra if they exceed the upper limit. On the other hand, they’re given a rebate for significant energy savings, so they have a financial incentive to reduce their consumption. The program was piloted here on Oahu last year with nearly a 10% reduction in costs. Although it’s a Navy program for now, PPV housing is being implemented by all the services and the conservation incentive program will spread quickly.

The Department of Defense announced last week that over 14,000 more billets will be open to women. The specific rule change now allows women to be assigned to ground combat units at the battalion level instead of being restricted to the brigade level. The Army also intends to open six occupational specialties to women (see page 4 of the link for the MOSs). The other services aren’t opening more occupations to women, but women are eligible to fill billets in more units.

I’m a military spouse and the parent of a woman servicemember, so I’ve followed the issue for over three decades. This DoD policy change shines a spotlight on career discrimination. Although women are over 14% of the 1.4 million active duty servicemembers, they’re less than 11 percent of the senior enlisted force and just seven percent of flag officers. There are a number of reasons why women leave the military before competing for senior ranks, but a significant reason is that they’re smart enough to recognize when they’re not given a fair chance. This policy change is an important step forward but there’s a lot of work to be done in infantry, armor, special forces, and the submarine force. The 18-page policy report to Congress (February 2012) linked at the bottom of this post is worth reading for the details of each service’s changes.

And finally, on a lighter note, you know that the American military drawdown is gaining worldwide attention when the Royal Australian Navy announces that it’s hiring. They’re specifically interested in U.S. veterans who are submariners, medical specialists, and AEGIS radar experts. This program has been around sporadically for at least the last two decades, and it always gets a lot of attention in the U.S. Navy because the Australian Navy allows alcoholic beverages at sea.

WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

1 Comment
  1. (This comment was sent in by Ana, for whom Gravatar & WordPress were not cooperating. Here you go, Ana, I’m not sure what glitched but I’ll look into it. — Doug)

    Comment: Well, I tried to leave this as a comment but it kept asking me to log into something. I don’t use Facebook in that way, nor do I have a WordPress account (and what is Gravatar?), so I decided to just email it. This was in response to today’s post about benefits changes:

    After six years in military housing, the whole PPV utility issue is not nearly as rosy as it seems. I lived through the transition from Navy to PPV when we lived in WA, and was part of a focus group a few years after it was implemented when they had begun to talk about utilities. I lived in a townhouse unit that had four in the building.

    Their idea of metering was to put one meter for every building, then work out an average for what type of unit you were in. So, our usage would be measured using everyone else’s. Even if we were really careful, we’d have to split our “savings” with our neighbors who liked the temperature at 80 in the winter. Something was really wrong about that. Also, when they spend their time tracking and measuring what their thresholds should be, they do it by giving everyone incentives for a period of time, instead of just measuring quietly to see what a true average is. I was very, very glad we moved out before all that happened.

    Now that it’s privatized, military housing really isn’t worth what most military members pay for it. I imagine some areas it might make sense, but for us, since we have only two children, when we moved from WA, my husband was an E6 (so we aren’t talking big money here), yet could have afforded to rent a small house in town for what we were paying for our attached, two bedroom townhouse on base. And that’s without having to pay extra for out neighbor’s utilities. We’re moving back to the States this summer, and the base we’re going to is even more dramatically not worth it. The enlisted housing is all older, small apartments. With what he gets in BAH, we can rent an entire house for just over half of his BAH. To be honest, I’m baffled how they can even keep those houses full, the difference is so great.

    Unless you are a very low ranked military member (I think our townhouse stopped looking so great when my husband many E5), or have a large family, military housing is probably not going to be your best value. I am actually baffled why an officer who has only a spouse would ever choose military housing.

    Comment? Question? What's on your mind?