Cover: A Policymaker's Guide to Accrual Funding of Military Retirement

A Policymaker's Guide to Accrual Funding of Military Retirement

Published 1997

by William M. Hix, William W. Taylor


Download eBook for Free

FormatFile SizeNotes
PDF file 3.4 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.


Purchase Print Copy

 Format Price
Add to Cart Paperback90 pages $15.00

Since 1985, military retirement has been funded prospectively on an accrual basis. Until that time, it was funded on a pay-as-you-go basis, leaving an unfunded liability of more than $500 billion. That unfunded liability was assigned to the Treasury Department, which is amortizing the debt over a 60-year period. Treasury amortization is annually offset by recomputations of the liability that result from changes in assumptions or experience. Those recomputations result in actuarial gains or losses, which result in adjustments to the Treasury payments. The report argues that the Department of Defense (DoD) should share in gains or losses. DoD now funds accrual payments though aggregate estimates of normal cost, undifferentiated by the experience of the various military services. A recommended change to service-specific imputations of normal cost would result in lower funding by the Army, Navy, and Marine Corps, and increased funding by the Air Force.

Research conducted by

This report is part of the RAND monograph report series. The monograph/report was a product of RAND from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.