Opportunity to Reduce Pension Costs
NSIAD-90-152: Published: Aug 3, 1990. Publicly Released: Aug 3, 1990.
- Full Report:
GAO reviewed the military forces retirement system to identify potential areas of cost reduction, focusing on members of the Ready Reserve who received additional retirement credits even though they did not meet the minimum required participation levels.
GAO found that: (1) some military forces were not transferring retirement-eligible Ready Reserve members earning less than 50 points a year to an inactive or retired status, as required by Department of Defense (DOD) policy; (2) in 1980, DOD suspended a directive requiring reservists to maintain a minimum level of participation or be transferred, but the Army did not comply with the directive after DOD lifted the suspension; (3) some Navy and Air Force reservists who did not meet the minimum level of participation were not transferred to an inactive or retired status; (4) as of September 30, 1989, almost 6,000 reservists had earned less than the required 50 points in each of their 2 most recent service years; (5) in total, those reservists received almost 149,000 retirement points in their most recent service years; (6) such points could increase long-term retirement costs by about $5.6 million, based on the approximate value of points as of January 1, 1990; and (7) in some services, the average number of retirement points reservists received was not much greater than the 15 gratuitous membership points, indicating that most of those personnel were essentially inactive.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: The Office of the Secretary of Defense has accepted the recommendation. The Army published a change to its regulations in February 1992 and DOD is to make one of its promised periodic tests of reservists files to monitor compliance in October 1992.
Recommendation: The Secretary of Defense should monitor and enforce service compliance with DOD Directive 1200.15, which provides that any member eligible for retirement who earns less than 50 points in 1 year be transferred to an inactive status.
Agency Affected: Department of Defense