May 30, 2005
Walking away well heeled
Navy buyout proposals could net you up to $415,000
By Mark D. Faram
Times staff writer
Navy officials want to pay tens of thousands of dollars in separation pay — even hundreds of thousands — to sailors with at least six years of service who are forced to leave the service under new drawdown plans.
As part of an end-strength slashing strategy to trim 25,000 sailors by the end of fiscal 2007 — and perhaps 25,000 more by 2011 — the Navy has outlined plans to compensate those asked to pack their seabags. In addition, officials are seeking permission to implement other “force-shaping” tools to help them trim the ranks.
Both initiatives still require congressional approval and funding, and prospects are uncertain in a war-strapped Pentagon budget cycle. Defense Department and Navy personnel planners, however, say they plan a full-court congressional press to try to convince lawmakers to authorize the proposals beginning with the 2006 budget that’s currently being negotiated.
The cash buyouts, officials concede, are intended to make sailors feel better about their forced retirements. They’re also designed to stave off any negative impact on retention and recruitment.
In one example, an 0-3 with 9 years of service would rate a $198,145.44 check for agreeing to leave early.
“We don’t want anyone to feel like they have been fired,” said. Jeri Busch, military compensation branch head on the staff of the Navy’s chief of personnel in Arlington, Va. “We want people to leave the service feeling good about what they’ve done and how they were treated.”
Calling existing separation payment programs “woefully inadequate,” Busch said career-minded sailors need two to four times the current allowable amounts in order to happily leave voluntarily.
“Being able to offer people something substantial to leave is important to us,” Busch said. “It sets what we like to call ‘tone,’ for those leaving, as well as those who stay behind. It’s not only for morale today; this can also impact future retention as well as recruiting.”
The plans the Navy and the Defense Department have proposed include:
• Offering tens of thousands of dollars in voluntary separation pay, up to four times the current allowable amount.
• Giving six months of “ID card” benefits at military medical and dental facilities, as well as at commissaries and exchanges to those forced from service.
• Reinstating the expanded selective early retirement authorities used during the 1990s drawdown and allow individual services to reduce the amount of time some senior officers can spend in uniform.
The “Targeted Separation Incentive” proposals are equally as important to the Air Force, said Bill Carr, acting deputy under secretary for military personnel policy.
That service plans to thin its ranks by 10,000 by 2011.
Unfortunately, Congress has yet to play ball. Neither the House nor Senate has included the proposed policy in their versions of the 2006 Defense Authorization Bill.
Brynn Barness, a spokesman for Rep. John McHugh, R-N.Y., chairman of the House Subcommittee for Military Personnel, said May 20 that lawmakers got the proposal jut two weeks before the subcommittee markup deadline and were unable to give it “proper consideration.” He also questioned the wisdom of Navy and Air Force officials paying sailors to leave the service when the Army and Marine Corps need more people in uniform than they can presently recruit.
Regardless, Carr said the Defense Department is not giving up the fight.
“We are not out of gas yet,” Carr said. “It's not over until all the amendments are acted on.”
Voluntary Separation Pay
The primary perk being proposed is a new Voluntary Separation Pay that pays up to four times the amount currently available under the existing separation pay program, enacted at the end of the Persian Gulf War in 1991.
“We don’t think the amount of the existing involuntary separation pay is enough incentive to get people to leave of their own free will,” Busch said.
The closer people are to the 20-year retirement point, the harder it is to get them to leave voluntarily, she said.
“Money talks,” she added.
The proposed VSP program would offer lump-sum payments to those with at least six, but not more than 15, years of service and a possible combination of lump sum and regular payments for those with 15 to 20 years of service.
“We feel for the most part, lump sum is the way to go and that’s what people want,” Busch said.
But for those in higher pay grades and more years of service, the Navy might be forced to stretch payments out over a longer time.
A reduced amount, not to exceed six months’ basic pay, also could be offered as a lump sum payment for those who are already retirement eligible, but have not reached their maximum allowed service.
“These people would still get their retirement pay; we’d just offer them six months’ salary to retire earlier than they might have planned,” Busch said.
For example, under the current separation pay program, an O-3 with 9 years of service would qualify for a payment $49,536 if involuntarily sent home.
But under the new plan, that same officer could get up to $198,145.44 for agreeing to leave.
The Pentagon proposal would not set minimum payment levels, opting instead to allow services to set the details of their individual programs.
The program would be targeted, officials said, identifying sailors in overmanned officer and enlisted specialties or those being phased out of jobs by military-to-civilian conversions.
That’s why, if the program is approved, the Navy won’t initially offer the maximum amounts.
“We plan to take a market-based approach,” Busch said. “This isn’t something people would apply to get, we would offer it to targeted groups of individuals,” she said.
Indeed, about 32 percent of the 25,000 sailors who will be cut by 2007 will come from lower recruiting goals, early-outs and normal attrition.
The wording of the proposed law would give service secretaries the ability to identify those specialties without Pentagon approval.
The Defense Department request also asks for reinstatement of expanded selective early retirement board authority that also expired in 2001.
The current SER authority only allows the services to target retirement-eligible O-5s who have twice failed to select and O-6s with 4 years time in grade.
Individuals can only be considered by a SER board once every five years, and the law doesn’t allow services to target year groups or specific specialties.
The new law would allow officers to be put in front of a SER board once a year and would allow for targeting of specific year groups and specialties. It would also lower the time in grade for O-6s from four to two years.
One thing the Navy did not ask for, but the Defense Department proposed, was a request to allow individual services the ability to lower the maximum amount of service for O-5 and O-6 officers.
Currently, the maximum service allowed for those paygrades is 28 and 30 years.
One of the toughest things about leaving the service is the end of not only medical and dental benefits, but also other “ID card” privileges such as using the commissary and exchange as well as other on-base amenities. Officials want to give six months’ worth of privileges to departing sailors.
“We thought this would be a good thing to help members and their family’s transition to civilian life,” Busch said.
I have a buddy that is Naval Aviator O-5(E) just hitting the 20 year mark. Looks like he may be in for a pretty big payday.