§12739 Computation of retired pay

Summary

You compute a person’s monthly retired pay by multiplying their retired pay base (a number set by other rules) by 2.5 percent for each year of service counted under the rules. If the Secretary credits an enlisted retiree with extraordinary heroism, add 10 percent of that amount. The Secretary’s decision about heroism is final. The total pay normally cannot be more than 75 percent of the retired pay base. For someone who retires after December 31, 2006 with more than 30 years of credited service, the total may include an extra amount for certain authorized service during a period the Secretary of Defense names, calculated using 2.5 percent. If the computed dollar amount is not a whole dollar, round down to the next whole dollar. A Retired Reserve member who is recalled to active Selected Reserve status and serves at least two years can get their retired pay recomputed; the Secretary may reduce that two-year rule to one year in certain adjutant general cases where the person left only because their appointment ended. People who first start reserve service on or after January 1, 2018 and had not served before that date, or who choose to be a “full TSP member,” use smaller multipliers: 2 percent per year instead of 2.5 percent, a 60 percent cap instead of 75 percent, and 2 percent for the extra post-30-years calculation. A person serving on December 31, 2017 with fewer than 12 years by that date may elect, between January 1, 2018 and December 31, 2018 (or a Secretary-approved extension for hardship), to take Thrift Savings Plan contributions instead of the reduced multipliers; someone who returns to reserve service after that period must decide within 30 days of rejoining. TSP contributions cannot be paid for pay periods before the election date. The Secretary must issue rules to implement these parts.