Pay & Benefits

2015 forecast: Expect turbulence in military compensation

The 2015 Military Times Pay Book is your guide to the complex world of military compensation. And as has been the case for a few years now, the increases in pay and allowances this year are slight to nonexistent.

Nothing symbolizes the lean tenor of the times more than the 2015 basic pay raise of 1 percent, repeating the pay raise troops received last year. Those are the lowest annual basic pay raises since at least 1962. In fact, the last five annual basic pay raises, all under 2 percent, have been the smallest in the history of the all-volunteer force created in 1973.

The 2015 basic pay raise mirrors the 2014 bump in another unsettling way: It will not keep pace with average private-sector wage growth, which was 1.8 percent last year — making this year and last the only two years since 1999 when the military raise lagged civilian wage growth.

The news is not much brighter for the second pillar of military compensation, Basic Allowance for Housing, but the BAH situation is not quite as clean-cut as the basic pay raise.

In essence, Basic Allowance for Housing rates are being scaled back by 1 percent this year, meaning monthly BAH checks for 2015 will be pegged to cover 99 percent of the estimated cost of local housing. For more than a decade before this year, BAH had covered 100 percent of the estimated cost of local housing for all troops.

Nevertheless, the reduction is the first of its kind in years and could shave about $200 million from the total BAH checks paid out to the roughly 1 million troops who live off post.

If there is a sliver of silver lining in the BAH policy change, it's that the 1 percent cut in the value of the allowance is a far smaller reduction than what Pentagon leaders originally asked for: to make service members pay 5 percent of their housing costs out of pocket.

The third major pillar of military compensation, Basic Allowance for Subsistence, rises by a comparatively robust 2.9 percent this year. BAS is linked to the Agriculture Department's food cost index.

The year ahead is likely to bring much more turbulence, with the imminent release of a massive two-year review by a congressionally chartered commission that has been combing through the entire universe of military compensation programs.

That report, due out in early February, is expected to take a particularly deep dive into potential alternatives to the military's venerable "cliff-vesting" retirement system, the basic structure of which has remained unchanged for generations.

2015 Basic Pay
All service members in paygrades O-6 and below received a 1 percent increase in basic pay effective Jan. 1. Officers in paygrades O-7 and above received no increase.
View the 2015 Basic Pay Chart

2015 Regular Military Compensation
Regular Military Compensation combines basic pay, Basic Allowance for Housing, Basic Allowance for Subsistence, and the tax advantage of those tax-free allowances. It dos not include the overseas housing allowance. The monthly rates listed below represent the average RMC for all service members with the paygrades and years of service shown. A dash indicates that none of the services reported having andyone in that combination of paygrade and service. Average annual military salaries as of Jan, 1.
View the 2015 Regular Military Compensation Chart

2015 Involuntarily Separation Pay
Most members involuntarily separated from active duty are eligible for separation pay. The figures shown here are the payments to people who have exactly the number of years of service listed; actual payments are based on both full and partial years of service. A dash in the chart indicates that none of the services reported any members with that combination of years and paygrade.
View the 2015 Involuntarily Separation Pay Chart

2015 Retirement Pay
Members who retire this year and do not have a disability retirement receive retired pay based on their basic pay. The figures in the table below assume three things: 1) That 2015 retirees with 34 or more completed years of active duty entered the military before Sept. 8, 1980, which puts them under the old plan that pegs retirement pay to a member's final basic pay; 2) that current-year retirees with less than 34 complete years of active duty entered the military after Sept. 7, 1980, which puts them under the High-3 plan that pegs retirement pay to a member's average basic pay over their three highest earning years in uniform, almost always the last three years; and 3) that retirees spent their final three years at the same grade in which they retired. The figures below assume the exact number of years of service shown; retirement pay is pro-rated for additional months of service. Exact amounts of retirement pay vary by individual and depend on such factors as annual pay raises and dates of longevity pay increases compared to dates of retirement. Monthly retirement pay on Jan. 1, 2015.
View the 2015 Retirement Pay Chart

Recommended for you
Around The Web