H.R. 145 would provide that payments for military retired pay be made by the Office of Personnel Management (OPM). GAO cannot support the concept of removing retired pay costs from the Department of Defense (DOD) budget without adequately reflecting military retirement accrued liabilities in the respective service accounts. Transferring military retired pay from DOD to OPM could involve considerable time and expense, and it could create an unnecessary hardship upon the retirees concerned until the operation was functioning properly. However, there would be certain advantages to transferring military retired pay functions to the Veterans Administration (VA), since the military retired pay is interrelated with VA pay items. Current regulations require that a member who receives retirement, disability retirement, disability severance pay, or readjustment pay benefits from the services must offset disability compensation received from VA. Since DOD and the VA must coordinate closely on retirement related benefits, administrative efficiencies can be achieved by consolidating the DOD and VA pay functions that are interrelated under a single coordinating point.
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