Retirement Security:

Preliminary Analysis of Military Compensation Systems in the United States and Five Other Countries

FPCD-81-21: Published: Dec 31, 1980. Publicly Released: Dec 31, 1980.

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A preliminary analysis was undertaken by GAO of the military compensation systems of the United States and five other countries. Specifically, GAO reviewed the contrasts and similarities among the systems and identified foreign pay policies or practices which offered the potential for use by the United States in countering All-Volunteer Force manpower problems.

In its review, GAO found that the military compensation system of the United States differs from the compensation systems of other countries in the manner in which it undertakes to satisfy personal living requirements with goods, services, and facilities, and in the way it compensates according to marital and dependency status. Australia, Canada, the United Kingdom, and the United States maintain their armed forces on a volunteer basis. The three foreign countries, however, have discarded pay and allowances structures similar to those of the U.S. system in favor of a taxable salary system. In Australia and the United Kingdom, the taxable salary system also includes an "X factor" paid to servicemen to compensate for the disadvantages and rigors of military life. Additionally, it was determined that U.S. pay rates, particularly when expressed in terms of purchasing power, are well below those of other volunteer force countries. Finally, the following concepts were identified which appear to offer promise for use in U.S. efforts to overcome current manpower problems: (1) the application of an "X factor" to the military pay system; (2) the linkage of the military pay system to the civilian economy; (3) the creation of a taxable salary system as the U.S. military compensation system; (4) the employment of differential pay rates as inducements for longer term enlistments; and (5) the application of special and premium pays to attract and retain military personnel to specific duties and occupations.

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