Congress has authorized the army to continue offering separation pay for soldiers who are separated or have been forced out. The 15-year early retirement plan has been authorized to be used through fiscal 2018.
Temporary Early Retirement Authority should not be considered an entitlement by soldiers. Instead, it should be considered an option provided only to soldiers who are being separated from active duty involuntarily due to the drawdown. In addition, this option also applies to officers who are being separated due to promotion non-selection.
TERA in 1990s
TERA in the 1990s allowed soldiers to volunteer for the benefit if they were not selected for involuntary separation. However, now, soldiers cannot volunteer for the benefit but can only be chosen. According to this authorization, TERA will only allow soldiers who have served at least 15 and less than 20 years of active service to be inducted for the benefit. Soldiers who have 20 years or more of experience in service will have their pay reduced accordingly.
According to the recent estimation by army budget officials, approximately 923 officers and 315 enlisted soldiers will qualify for TERA, since the army is continuing to involuntarily separating soldiers in accordance with their over-strength specialties and year groups.
Involuntary Separation Pay
If a soldier has 6 to 15 years of active service at the time of separation but does not qualify for TERA will receive involuntary separation pay. Note that in order to be eligible for involuntary separation pay does not include soldiers who are being separated as a result of courts-martial conviction.
Involuntary separation pay has two categories:
1. Full Severance Pay: Soldiers who are enlisted and officers who are qualified for retention but are not re-enlisted or separated receive Full Severance Pay. The formula for calculating this pay is multiplying 10 percent of the soldier’s current basic pay by years and partial years of active service.
2. Half Severance Pay: Soldiers who are not qualified for retention and have not been enlisted or receive continuation will receive Half Severance Pay. Note that soldiers who are not continued with even under the Qualitative Management Program will be eligible for this pay. The formula for Half Severance Pay is to multiply 5 percent of the soldier’s current basic pay by years and partial years of active service.
According to budget officials, approximately 11,400 enlisted soldiers and 2,654 officers will be eligible for involuntary separation pay during the next two years.
Severance Pay for Disability
Officers and enlisted soldiers who are discharged from active duty due to a physical disability and have less than 20 years of services are rated at less than 30 percent. Note that these payments are based on complex formulas as mentioned in the provisions of Title 10 of the U.S. Code.
According to the Army budget’s indications, around 10,600 enlisted soldiers and almost 200 officers will be receiving these benefits during 2016 and 2017. Each enlisted soldier will be receiving $35,000 and officers will be receiving $86,000.