Proper Computation of the Retired Pay Reduction

The U.S. Marine Corps requested the proper computation of the retired pay reduction. The issues stem from a Marine Corps member's retirement from active military service and his subsequent appointment to a full-time civilian position. The member's retired pay was reduced pursuant to the statutory requirement. Two questions were considerd regarding the proper method of computing the further reductions under the statute. The first question concerned the proper interpretation of the statute. It was suggested that the statute may allow alternate methods of computing the retired pay reduction. Under the method now being used, the cost of participation in a survivor benefits program or a veterans' insurance program is not considered in computing the required reduction unless the remainder is inadequate to cover that cost. Under the alternate method suggested, the cost of participating in those programs would be subtracted from retired pay before computing the amount by which the retired pay combined with the civilian salary exceeds level 5 of the Executive Schedule. In the view of GAO, the statute is clear on its face and is subject to only one interpretation. The statute simply requires that, when reducing retired pay by the amount which the retired pay combined with civilian salary exceeds level 5 of the Executive Schedule, the retired pay remaining will at least be equal to the cost of participating in a survivor benefits program or veterans' insurance program. The second question presented was whether retroactive payments of retired pay may be made at the end of a year to the member if his combined civilian salary and retired pay for the entire year does not exceed the annual pay prescribed for level 5 of the Executive Schedule. The current dual compensation limitations of the statute generally require that the reduction of retired pay of a retired service member holding full-time Federal civilian employment be computed on a pay period rather than an annual basis. Therefore, GAO believed that the current dual compensation provisions do not permit retroactive payments at the end of a year to adjust the retired pay accounts of individuals from whom retired pay has been withheld in pay periods during the year. Accordingly, the retired pay and salary may be computed following the stated guidelines.