SubscribeMilitary Retirement Pay
The military (active duty) retirement system is widely acknowledged to be one of the best deals you can get anywhere. You effectively get a pension when you leave that is paid to you every year for the rest of your life, and you could be in receipt of it as early as 37 years of age if you retire from the service at that stage.The other hugely significant benefit is that the pension scheme is index linked, so it grows with the cost of living. If you have served in the Reserves, then the system is different and you should research the subject separately.
Over the past 20 years, there have been many changes to the military retirement pay system and the government is dedicated to reviewing the system all the time so that the military gets the best deal. Here are some of the most recent changes.
Payment Cap Now Lifted
There used to be a cap on the maximum percentage of the retired pay base up to 30 years, but this has now been lifted. So if you serve 32 years you will receive 80 percent and if you serve 42 years it will be 105 percent of the retired base pay.
• Cap Lift Exclusions: there are always exceptions, and if you have retired because of disability then the law still maintains a payment cap of 75 percent.
• If, in the case of the Army and Air Force, you have been cited for Extraordinary Heroism then there is a cap of 75 percent on the computation. This is a legacy rule from the before the regulatory changes and it simply has not been changed. This cap is offset though by an additional payment benefit only available to those cited for Extraordinary Heroism, such as the monthly benefits paid to Purple Heart recipients.
Determine your rate
If you entered the service prior to September 1980, then you are eligible for the Final Payment scheme (the last pay rate you held prior to retirement). If you entered service between September 8th and August 1986, your rate is determined through the High 36 system. And finally, if you entered service after August 1986, you can choose between the High 36 or the Career Status Bonus/REDUX programs. If you can’t or don’t choose, then you will automatically be placed on the High 36 retirement pay system.
Regardless of which military retirement pay system you fall under, the benefits offered for military retirement remain among the best available retirement systems, and is truly an award for your long years of service to the country.
