The Army will continue to offer separation pay for soldiers who are being forced out.
Temporary Early Retirement Authority
This benefit, also known as the 15-year early retirement plan, has been authorized by Congress for use during the drawdown through fiscal 2018.
TERA is not an entitlement, but rather an option that to date has been limited to soldiers who are being involuntarily separated from active duty because of the drawdown, or in the case of some officers, because of promotion non-selection.
Unlike the TERA option that was available during the drawdown of the 1990s, soldiers cannot volunteer for the benefit if they have not been selected for involuntary separation.
TERA allows soldiers with at least 15, but fewer than 20 years of active service to receive the same benefits as those who retire with 20 or more years of service, except that their retirement pay is reduced accordingly.
Army budget officials estimate that over the next two years, 923 officers will qualify for TERA, and 315 enlisted soldiers as the Army continues to involuntary separate soldiers in over-strength specialties and year groups.
Involuntary Separation Pay
Soldiers who fail to qualify for TERA, but who have six to 15 years of active service at the time they are separated, generally qualify for involuntary separation pay, provided they are not being forced out for cause, such as a courts-martial conviction.
There are two types of involuntary separation pay:
• Half Severance Pay – for soldiers who are not fully qualified for retention, and who have been denied re-enlistment or continuation, such as under the Qualitative Management Program. The payment is calculated by multiplying 5 percent of a soldier's basic pay at the time of separation by years and partial years of active service.
• Full Severance Pay – for enlisted soldiers and officers who are fully qualified for retention, but who are denied re-enlistment or continuation. The payment is calculated by multiplying 10 percent of a soldier's basic pay at the time of separation by years and partial years of active service.
Budget officials estimate that during the next two years, about 11,400 enlisted soldiers and 2,654 officers will receive involuntary separation pay.
Severance Pay for Disability
For officers and enlisted soldiers with less than 20 years of service who are discharged from active duty because of a physical disability rated at less than 30 percent.
Payments are based on complex formulas described in the provisions of Title 10 of the U.S. Code. Army budget projections indicated that about 10,600 enlisted soldiers and nearly 200 officers will receive these benefits in 2016 and 2017 combined. On average, enlisted soldiers will receive $35,000, and officers $86,000.