Assessing Compensation Reform: Research in Support of the 10th Quadrennial Review of Military Compensation 2008

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  • Format: Paperback
  • Copyright: 2008-12-16
  • Publisher: RAND Corporation
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Military compensation is a pillar of the all-volunteer force. It is a fundamental policy tool for attracting and retaining personnel, and its structure-and the incentives implied by its structure-can affect U.S. service members' willingness to join, exert effort, demonstrate their leadership potential, remain in the military, and, eventually, exit the military at an appropriate time. Military compensation is a composite of current pay and allowances, special and incentive pays, health benefits, disability benefits, retirement benefits, and other benefits. Its importance to the readiness and morale of the force is such that it is reviewed every four years to determine whether it is adequate to meet the U.S. military's objectives. To inform the 10th Quadrennial Review of Military Compensation, this monograph presents an in-depth examination of the mix and structure of the U.S. military's current retirement-benefit system and several policy alternatives. The study included the development of a model that was estimated and used to run a series of simulations based on active-duty and reserve personnel data to track the careers and potential decisionmaking of military personnel across the services. The simulation results were then assessed in terms of their cost-effectiveness and ability to meet the services' expectations for accession, retention, and career mobility. Book jacket.

Table of Contents

Prefacep. iii
Figuresp. vii
Tablesp. ix
Summaryp. xi
Acknowledgmentsp. xix
Abbreviationsp. xxi
Introductionp. 1
The Case for Retirement Reformp. 7
Analytic Frameworkp. 15
Overview of the Modelp. 16
Active and Reserve Retention Modelp. 19
Nested Logit Specificationp. 26
Simulationp. 35
Limitationsp. 37
Estimates and Base-Case Resultsp. 43
Parameter Estimatesp. 43
Base-Case Resultsp. 47
Benchmarking of Base-Case Resultsp. 53
Simulation Resultsp. 57
DACMC Resultsp. 57
QRMC Proposalp. 65
Conclusions and Policy Implicationsp. 77
Summary of Findings from Simulationsp. 77
Compensation from the Perspective of the Member Leaving Active Dutyp. 79
Discussionp. 86
Equityp. 86
Force Managementp. 88
Cost-Effectivenessp. 89
Conclusionp. 90
Description of Current Retirement Systemsp. 91
Estimation Method and Data Sourcesp. 95
High Year of Tenurep. 105
Comparisons with Different Discount-Rate Assumptionsp. 109
Bibliographyp. 113
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