Proposal: Immediate Retirement Pay for Reserve Component

(March 7, 2014) A Pentagon proposal would give National Guardsmen and Reserve members retirement pay immediately after completing 20 years of service.

The pay would be slight and would result in less pay over a veteran’s lifetime, but the Defense Department thinks it may appeal to many troops.

The proposal was detailed in a special report Thursday by Military Times.

Checks might be for only a few hundred dollars a year for a veteran who served only in the reserve component. The amount would increase upon reaching age 62.

The report says retirement pay for both components would be supplemented with a 401(k)-style investment account. The government would contribute 5 percent and service members would have the option of contributing from their own paychecks. They would own the account after six years.

Military Times notes the “delicate balance” required for determining how much to pay reserve component troops after 20 years. If the pay is too generous, the troops may forego continued service in the reserve component. Also, it may attract active-component members and cause retention problems in that force.

The proposal was sent to Congress Thursday. It was also delivered to the Military Compensation and Retirement Modernization Commission that is reviewing the issue and will make its report to Congress early next year.