This week in DoD sequestration news

| January 17, 2014

Army Early-outs
Thousands of enlisted soldiers may be affected by early-outs of up to 12 months. The Enlisted Involuntary Early Separation Program affects soldiers whose enlistments will soon expire and do not elect to re-enlist or extend. The program is authorized through the end of 2016. Don’t let the term “involuntary” mislead you. These soldiers will remain eligible for post-service benefits, although separation pay will only be provided if they have at least six years of service.

Air Force RIF and Quality Force Review Boards
An Air Force RIF board on June 16 will determine whether to separate officers in some career fields. Eligible captains and majors can apply for voluntary separation pay rather than meeting with the board. They have until May 1 to do so, and would separate on Sept. 29, receiving 1.25 times standard separation pay. Those chosen by the board for separation will have until Jan. 31, 2015 to leave, and will receive standard separation pay. Another option for those with at least 15 years of service is to apply for Temporary Early Retirement Authority.

A Quality Force Review Board will convene in May, with 7,000 enlisted airmen possibly separating. Affected airmen are those up to the rank of senior master sergeant with a negative quality indicator code, except those with between 18 and 20 years of service. Voluntary separation pay is not applicable in this situation. Those with between six and 15 years who are selected by the board to separate will receive separation pay. Those with more than 15 and less than 18 years will be offered TERA. Those with at least 20 years will receive regular retirement.

Yet Another Possible Change to Basic Allowance for Housing
A locality allowance, which would be based on the cost of living where troops are located instead of average rental costs in different areas, is a possibility for replacing BAH. The plan would also get rid of the Basic Allowance for Subsistence and “with-dependents” rates.

Job Security Concerns
Results of a recent First Command Financial Behaviors Index® reveal that 37 percent of middle-class military families* are concerned about their job security in the coming months. First Command CEO Scott Spiker stated that “sequestration and defense downsizing are creating new financial concerns for servicemembers and their families. They are now asking tough questions about their futures, like ‘do I want to stay in and make this a career?’ or ‘do I even have the option anymore to make this a career?’” Those who have chosen to make the armed forces their career are reporting a variety of job-related anxieties, including the fear that their 20-year career goals will come to a premature end. When military respondents were asked how sequester cuts have been impacting their careers, they identified reduced possibilities for promotion and increased likelihood to experience early separation or not serve to full retirement.

Concerns About Cuts to Retirement Benefits
In addition to job security, military families are also concerned about sequestration-related budget cuts to retirement benefits. A second First Command Financial Behaviors Index® reveals that 85 percent of middle-class military families* who are aware of planned government cuts to military retirement benefits expect to be financially affected by them. Almost half (45 percent) say they expect to be “extremely” or “very” affected by the cuts. Spiker said “Servicemembers are feeling increasingly nervous about the impact of defense downsizing…and retirement benefits are their top concern. The Index reveals that 72 percent of survey respondents reported feeling anxious about sequestration. When asked how sequester cuts have been impacting their family, a reduction in retirement benefits was identified by 32 percent.” The Index reveals that just 35 percent of survey respondents felt extremely or very confident in their ability to retire comfortably. With the FY14 budget calling for reduced pension COLAs for working-age retirees, these high numbers are not surprising.

The House passed the FY14 appropriations package on Wednesday, and the Senate passed it last night. The president is expected to sign it by Saturday. The $1 trillion funding bill does ease some of the sequester cuts for a couple of years, however, Pentagon R&D funding will be slashed by up to 20 percent.

*Senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000

Sources: First Command Financial Behaviors Index®,,,

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