Review Panel Urges Changes in Combat, Incentive Pays

By Jim Garamone

American Forces Press Service

WASHINGTON, June 21, 2012 – The 11th Quadrennial Review of Military Compensation recommends changes to combat pay and changes to special and incentive pays while saying current military pay rates are about right.

Tom Bush, the study’s director, said the review also recommended further study of compensation of wounded warriors and their caregivers, for survivors, and making compensation for reserve-component service members consistent.

Bush and Jeri Busch, the Pentagon’s director of military compensation policy, spoke with reporters yesterday and stressed that the review’s findings are recommendations. While some of the recommendations may become reality, they said, the review – convened by President Barack Obama – is meant to inform White House, congressional and Defense Department leaders.

The review found that military compensation compares favorably against private-sector pay, Bush said. Enlisted pay is at the 90th percentile of overall pay meaning it is ahead of 90 percent of comparable civilian workers’ pay. The review graphed enlisted regular military compensation against civilians with high school diplomas, civilians with some college and civilians with associate’s degrees. Service members do better than these comparable civilians at any point in a 20-year career, the study found.

Commissioned officers’ regular military compensation is higher than that of 83 percent of civilians with bachelor’s and master’s degrees.

The review recommends an overhaul of combat compensation, Bush said. The review recommends setting hostile-fire pay higher than imminent danger pay and having more than one level of imminent-danger pay to reflect varying levels of danger in different locations authorized for the pay.

A QRMC survey of service members indicate that they believe combat compensation is unfair, Bush said, noting that the longer service members are in the military, the better the benefit is for them. Because they receive higher pay than junior personnel, senior service members receive more benefit from the combat zone tax exclusion for military pay. The vast majority of those under fire are junior personnel – both officer and enlisted – who do not benefit as much from the tax exemption, Bush said.

The review also recommends replacing the combat zone tax exclusion with a refundable tax credit, Bush said. “Even if their tax bill is zero, they are going to get that credit back if it is refundable,” he added. The combat tax credit would be linked to coming under hostile fire, Bush explained.

Another suggestion from the review is a direct-support tax credit linked to imminent danger pay. “We would also suggest that the tax credit … be prorated,” Bush said. “If you are not in the zone, if you are not exposed to danger, you don’t get it.”

The review also recommends an annual recertification of combat zones, which are designated by presidential executive order, in the same manner as declaration of a state of emergency.

The review also delved into pay incentives such as bonuses and monthly incentive pays and the services use to manage particularly vital career fields. For example, nuclear officers aviators and some military medical personnel receive special pay. The review recommends establishing a general career incentive pay authority that isn’t linked to specific career fields such as aviation or medicine, but could be tailored to grow or shrink as circumstances warrant.

President Barack Obama’s letter of instruction on the review panel’s mission specifically cited four examples: special operations forces, remotely piloted vehicle operators, linguists and translators, and mental health experts, Bush said.

The QRMC is looking whether an authority exists to offer a career incentive pay that can be applied to any career field deemed critical. The review recommends that rather than just asking for another special pay category, the Defense Department would have the authority to pay anyone – cryptanalysts, for example – when needed, Bush said. This would require legislation, he added.

The review also made recommendations on wounded warriors and their caregivers, and for survivors. The review found that wounded warriors are well provided for financially, and recommends continued study of wounded warriors’ earnings and disability payments to monitor long-term financial well-being. Another recommendation looks to create a seamless transition between the Defense and Veterans Affairs departments for service members leaving the military.

The review revealed that DOD and VA need more empirical data on the financial situation of wounded warriors’ caregivers, and the report recommends more study of this.

Finally, the review recommends modifying the survivor benefit plan to allow surviving spouses to receive the portion of the SBP annuity funded by retiree premiums.