By Tom Philpott: Military Update
To strengthen the link between pay and performance, the military should raise the pay of unmarried service members to the level of married members, says a blue ribbon panel completing a year-long pay study.
The Defense Advisory Committee on Military Compensation prepared a summary of recommendations for senior defense officials that includes a call to end a pay disparity for single members that can be traced to World War I.
Chaired by retired Navy Adm. Donald L. Pilling, the committee is recommending many major changes to compensation. Its final report, to be released in April, will propose an overhaul of the military retirement system for future service members and new business-like incentives to reward performance and to lengthen service careers in high-demand specialties.
Pilling, sources said, briefed Defense Secretary Rumsfeld on committee recommendations in late January. He also briefed service leaders. Military Update obtained a copy of slides used in those briefings.
The goal is to give the services greater flexibility and more modern, cost-effective tools to shape the force. The changes, said Pilling in his briefings, should include a combination of reforms including:
• Government-matching of member Thrift Savings Plan contributions, from 5 or 10 percent of basic pay, with full vesting after five years so members can transfer the 401k-like accounts to civilian careers;
• Replacement of the traditional retirement plan that earns no benefits for those who serve less than 20 years with a more flexible plan that delays full retirement annuities until age 60. “Lifetime immediate retired pay was designed for another era and force,’’ DACMC says;
• New incentives to “buy out” members voluntarily after 10 years;
• Restructuring of military pay to reward time-in-grade rather than time-in-service, thus emphasizing performance over longevity;
• Adding new raises to the pay structure to reward service beyond 30 years and to encourage certain specialties to stay up to 40 years.
The advisory committee’s seven members have discussed many of these changes in public meetings over the last year. Pilling also has emphasized that the current force should be grandfathered — that is, protected — from any change that could be perceived as breaking faith.
The exception, he has said, is higher TRICARE fees that have not changed since 1995. Defense officials said this month they will raise those fees and deductibles for retirees and their families under 65. The advisory committee supports the increases, according to the briefing.
The call to end the married-single pay disparity likely will not be heeded unless it is part of more sweeping changes to military compensation. The problem is the cost, about $1 billion annually. To provide pay equity to 589,000 single members, the committee recommends two actions:
• Eliminate the “without dependents” rate for Basic Allowance for Housing and for Overseas Housing Allowance, thus moving unmarried members to the higher “with dependents” rate. This would raise tax-free housing allowances in stateside areas by an average of $5,300 a year for single officers and $4,400 a year for single enlisted.
• Eliminate the $250-a-month Family Separation Allowance (FSA) as part of a “consolidation” of special and incentive pays tied to deployments and hardship tours. FSA is paid to married members during temporary duty assignments lasting longer than 30 days. It widens the pay disparity between married and single members by $1,500 during six-month tours at sea or by $3,000 during year-long tours in Iraq.
“Appropriate compensation for deployment or (for) the nature of the tour should not differ between those with dependents and those without dependents,” says one of committee’s briefing slides.
Unequal pay between married and single members dates back to World War I when Congress passed a temporary measure to provide “commutation pay” to cover quarters, heat and light expenses for Army officers whose families could not be housed in government quarters.
Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: email@example.com