How Do Military and Civilian Compensation Compare? In contrast with the previous retirement system, the Blended Retirement System provides for earlier vesting of some retirement benefits, adds a defined contribution component, and shifts some benefits from deferred to cash compensation (in the form of bonuses for remaining in the military). Also, in 2016, the Congress authorized the creation of a new retirement system-the Blended Retirement System. But lawmakers increased basic pay by less than the rate of increase for civilian wages from 2014 through 2016 and authorized DoD to slightly reduce housing allowances. For example, regular military compensation, or RMC- basic pay, allowances for food and housing, and the tax advantage that arises because those allowances are not subject to federal income tax-grew by 20 percent for the active-duty force as a whole between 20 after adjusting for inflation. Deferred noncash benefits include veterans’ health care, educational programs, and vocational programs.Ĭash compensation grew significantly during the past two decades, but that growth has slowed in recent years. Deferred cash pay includes retirement pay and disability compensation. Current noncash benefits include family health care, schools for dependent children, and other programs, such as child care and discount groceries. Current cash pay also includes additional cash earnings, such as lump-sum bonuses and monthly compensation for a specific occupation or duty. Basic pay varies by pay grade, and housing and food allowances vary by pay grade and the number of dependents. What Are the Components of Military Compensation and What Are the Trends Over Time?Ĭurrent cash pay, which includes basic pay and allowances such as those for housing and food, typically accounts for slightly more than half of a service member’s compensation. Ultimately, the system must be assessed on its ability to attract, retain, and motivate personnel of the necessary quality at the lowest possible cost. It compares that compensation with pay and benefits in the civilian sector and presents some options for changing the compensation system. service members (about 1 million enlisted personnel and 230,000 warrant and commissioned officers). This analysis considers compensation for the approximately 1.3 million active-duty U.S. Researchers have also found that bonuses are cost-effective tools for attracting and retaining personnel in hard-to-fill occupations. Researchers have found that an increase in cash compensation increases the supply of high-quality enlisted recruits and boosts retention. To fund those elements of military compensation for current and former personnel, DoD and the Department of Veterans Affairs together expected to spend about $350 billion in 2019. Compensation for military personnel is a mix of cash earnings and noncash, or in-kind, benefits received while they are serving, as well as the deferred pay and benefits they may receive after leaving-or separating, in military parlance. To attract and retain high-quality military personnel, assign them to needed occupations, and motivate them to perform their best, the Department of Defense (DoD) must offer a compensation package that adequately rewards service members for the rigors of military life.
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