Cover: The Accrual Method for Funding Military Retirement

The Accrual Method for Funding Military Retirement

Assessment and Recommended Changes

Published 2001

by Richard Eisenman, David W. Grissmer, James Hosek, William W. Taylor


Download eBook for Free

FormatFile SizeNotes
PDF file 3.7 MB

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


Purchase Print Copy

 Format Price
Add to Cart Paperback92 pages $9.00

Prior to 1984, military personnel force managers had little incentive to control retirement budgets and payments, which equaled $16 billion in 1984,since any decisions made would not be reflected in budgets for 20 or more years. Congress directed the Department of Defense in 1984 to switch to an accrual method for accounting for military retirement in the budget process that would replace the current outlays for retirement in the DoD budget with an amount that reflected the present value of the estimated cost of future retirement benefits earned by each incoming cohort of personnel. The accrual method has helped improve management of retirement benefits and liabilities, but has failed so far to produce either better estimates of retirement costs or effective incentives for better management of the force structure. The authors provide recommendations that would improve cost estimation and increase accountability for force-management decisions.

The research described in this report was performed under the auspices of RAND's National Security Research Division.

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.