Jun 28, 2012
Presents officer and enlisted retention and cost effects by branch of service for variants of a new approach to reserve compensation proposed by the 11th QRMC. The QRMC approach offers reservists daily basic pay and allowances equal to those for active components and retirement eligibility after 30 years of service. The new approach is viable, enhances force management, costs less, but requires supplemental pay to sustain reserve force size.
Published Jun 28, 2012
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Because Reserve Component (RC) members are increasingly used in an operational capacity, the 11th Quadrennial Review of Military Compensation has proposed paying reservists daily basic pay and allowances equal to Active Component (AC) members, regardless of type of duty. To analyze the new compensation policy, RAND used a stochastic dynamic programming model of AC retention and RC participation to simulate the effects of 11 variants of the proposal on AC retention, RC participation, and cost relative to the current baseline approach for RC officer and enlisted personnel for all four service branches. The new approach RAND considered has four elements: regular military compensation (RMC) paid for each day of reserve service; 53 RC retirement points, one for each day of service; retirement eligibility after 30 years of service; and supplemental pay. A key finding is that the new approach — with supplemental pay set to hold RC prior force size constant — is less costly than the baseline. This holds whether supplemental pay is a flat-amount per year or an amount targeted to mid-career years. The new approach can meet RC force requirements, even in the absence of a decrease in retirement age, but supplemental pay is critical to ensure that the RC meets its desired force size. Another advantage of the proposed compensation policy is that it offers the opportunity for enhanced force management flexibility as force requirements and economic conditions change.