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Assessing Compensation Reform
Research in Support of the 10th Quadrennial Review of Military Compensation
Military compensation is a pillar of the all-volunteer force. It is a fundamental policy tool for attracting and retaining personnel, and its structure — and the incentives implied by its structure — can affect U.S. service members' willingness to join, exert effort, demonstrate their leadership potential, remain in the military, and, eventually, exit the military at an appropriate time. Military compensation is a composite of current pay and allowances, special and incentive pays, health benefits, disability benefits, retirement benefits, and other benefits. Its importance to the readiness and morale of the force is such that it is reviewed every four years to determine whether it is adequate to meet the U.S. military's objectives. To inform the 10th Quadrennial Review of Military Compensation, this monograph presents an in-depth examination of the mix and structure of the U.S. military's current retirement-benefit system and several policy alternatives. The study included the development of a model that was estimated and used to run a series of simulations based on active-duty and reserve personnel data to track the careers and potential decisionmaking of military personnel across the services. The simulation results were then assessed in terms of their cost-effectiveness and ability to meet the services' expectations for accession, retention, and career mobility.
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Pages: 138
ISBN/EAN: 9780833045676
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Contents
Chapter One:
Introduction
Chapter Two:
The Case for Retirement Reform
Chapter Three:
Analytic Framework
Chapter Four:
Estimates and Base-Case Results
Chapter Five:
Simulation Results
Chapter Six:
Conclusions and Policy Implications
Appendix A:
Description of Current Retirement Systems
Appendix B:
Estimation Method and Data Sources
Appendix C:
High Year of Tenure
Appendix D:
Comparisons with Different Discount-Rate Assumptions
The research described in this report was prepared for the Office of the Secretary of Defense (OSD). The research was conducted in the RAND National Defense Research Institute, a federally funded research and development center sponsored by the OSD, the Joint Staff, the Unified Combatant Commands, the Department of the Navy, the Marine Corps, the defense agencies, and the defense Intelligence Community.
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