Computation of Retired Pay

B-204120: Mar 25, 1982

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A disbursing officer for the Marine Corps Finance Center requested an advance decision concerning the eligibility date to be used in computing the retired pay of a brigadier general. The general was retired under provisions of the U.S. Code authorizing an officer of the Marine Corps to be retired voluntarily upon his application after his completion of more than 20 years of active service. When the general in question retired, he had approximately 26 years and 6 months of active service and had thus been eligible for voluntary retirement for more than 6 years prior to his actual retirement date. The general served in the position of Assistant Judge Advocate General of the Navy for three years preceding his retirement. While serving this post he held the commissioned grade of colonel, but he was retired in the higher grade of brigadier general at the discretion of the President, as authorized by Federal regulations. In requesting the advance decision, the disbursing officer indicated that the general's retired pay was currently being computed on the premise that the general's actual retirement date was the earliest possible date from which he was eligible for retired pay as a brigadier general. The disbursing officer further indicated that a more favorable computation would result if an earlier date of retirement eligibility in that grade could be established for him. However, doubt has arisen concerning the propriety of using that alternate computation, because the general was not promoted to his retirement grade while serving on active duty. GAO stated that the U.S. Code was amended to alleviate the retired pay inversion problem, which was created by the fact that for several years upward cost of living adjustments of retired and retainer pay had occurred in greater amounts than increases in active duty basic pay. The amendment was intended to provide an alternate method of calculating retired pay or retainer pay. Therefore, GAO concluded that the general became eligible for voluntary retirement as a brigadier general immediately after he began serving as Assistant Judge Advocate General.

MILITARY RETIRED PAY IS ADJUSTED TO REFLECT CHANGES IN THE CONSUMER PRICE INDEX RATHER THAN CHANGES IN ACTIVE DUTY PAY RATES. AND AS A RESULT A "RETIRED PAY INVERSION" PROBLEM AROSE: SERVICE MEMBERS WHO REMAINED ON ACTIVE DUTY AFTER BECOMING ELIGIBLE FOR RETIREMENT WERE RECEIVING LESS RETIRED PAY WHEN THEY EVENTUALLY RETIRED THAN THEY WOULD HAVE RECEIVED IF THEY HAD RETIRED EARLIER. SUBSECTION 1401a(F), TITLE 10, UNITED STATES CODE, WAS ADOPTED TO ALLEVIATE THAT PROBLEM. HE WAS ULTIMATELY RETIRED IN THAT GRADE IN 1981. HIS RETIRED PAY IS PAYABLE IN ACCORDANCE WITH THE COMPUTATION MOST FAVORABLE TO HIM UNDER 10 U.S.C. 1401a(F) BASED ON HIS ELIGIBILITY FOR RETIREMENT AS A BRIGADIER GENERAL ON ANY DATE AFTER AUGUST 1. RETIRED: THIS ACTION IS IN RESPONSE TO A REQUEST FROM A DISBURSING OFFICER OF THE MARINE CORPS FINANCE CENTER FOR AN ADVANCE DECISION CONCERNING THE RETIREMENT ELIGIBILITY DATE TO BE USED UNDER 10 U.S.C. 1401a IN COMPUTING THE RETIRED PAY OF BRIGADIER GENERAL.