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[House Document 113-60]
[From the U.S. Government Publishing Office]

113th Congress, 1st Session - - - - - - - - - - - - - House Document 113-60

 
  PRINCIPLES FOR MODERNIZING THE MILITARY COMPENSATION AND RETIREMENT 
                                SYSTEMS

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

THE PRINCIPLES FOR MODERNIZING THE MILITARY COMPENSATION AND RETIREMENT 
        SYSTEMS AS REQUIRED BY PUBLIC LAW 112-239 SECTION 675(c)

 September 12, 2013.--Message and accompanying papers referred to the 
         Committee on Armed Services and ordered to be printed
To the Congress of the United States:
    Pursuant to section 674(c) of the National Defense 
Authorization Act for Fiscal Year 2013, Public Law 112-239, 
January 2, 2013, I hereby transmit principles for modernizing 
the military compensation and retirement systems requested by 
the Act.

                                                      Barack Obama.

    The White House, September 12, 2013.
  Principles for Modernizing the Military Compensation and Retirement 
                                Systems

    Sections 671-680 of the National Defense Authorization Act 
for Fiscal Year 2013 establish the Military Compensation and 
Retirement Modernization Commission. Section 674(c) requires 
the President to provide the Commission and the Congress with 
principles to guide the Commission's review and 
recommendations.
    For over a decade, our men and women in uniform have 
participated in one of the most extraordinary chapters of 
service in the history of our Nation. They have served multiple 
tours of duty in distant, different, and difficult places. They 
come from all walks of life and all stations; Active, Reserve, 
and National Guard; serving together to protect our people, 
while giving others a chance to lead a better life. We owe each 
and every one of them and their families a tremendous debt of 
gratitude for their sacrifice, service, and patriotism.
    Our Nation requires a strong military for our security and 
for the defense of American values and principles abroad. While 
we have successfully transitioned from a conscripted force to 
an All-Volunteer Force, sustaining this force requires 
responsive and prudent management, especially given the fiscal 
challenges we face as a Nation.
    In conducting the Commission's review and in developing 
recommendations, you should ensure that the Commission examines 
all areas outlined in section 671(b)(1) and considers the full 
breadth of the military compensation and retirement systems, to 
include healthcare programs, programs supporting military 
families, as well as programs of the Federal Government that 
may influence decisions of current and future members of the 
military to join and remain in the service of our Nation. The 
Commission's review should also consider and examine: our 
Nation's ability to sustain an All-Volunteer Force; the 
retention of our most experienced and qualified service members 
and the alignment of compensation and management to achieve 
this end; our current promotion system and associated force 
shaping tools; and our responsibilities to the American 
taxpayers. The review should provide recommendations for 
sustaining the long-term viability of the All-Volunteer Force 
in a fiscally responsible manner.
    The Commission's recommendations and analysis for reforming 
and modernizing the military's compensation and retirement 
systems should be based upon the priorities outlined in 
sections 671(b)(2) and 674, and upon the longstanding 
principles of military compensation developed by the 5th 
Quadrennial Review of Military Compensation, as outlined below. 
The Commission's recommendations for change must grandfather 
any currently serving military members and current retirees in 
the current military retirement systems, but may allow 
currently serving members and current retirees the choice to 
change to your proposed retirement system. The Commission's 
recommendations should also be guided by the following 
principles:
    1. Manpower and Compensation Interrelationship. Military 
compensation and retirement systems are an integral part of the 
military's overall human resource management system and are key 
tools for recruiting, managing, and retaining the best military 
personnel. The military compensation and retirement systems 
should consider differences between service in the Armed Forces 
and service in other uniformed services. They should also 
consider differences between regular and reserve military 
service and facilitate, as appropriate, the use of reserve 
service to support regular military forces.
    2. Efficiency. The military compensation and retirement 
systems must attract, retain, and motivate a sufficient 
quantity of military personnel and those of the highest quality 
to sustain the All-Volunteer Force. While the military 
compensation and retirement systems should provide a reasonable 
standard of living, they should be fiscally sustainable and 
impose the least burden possible on the American taxpayer, 
consistent with maintaining a high-quality, All-Volunteer 
Force.
    3. Equity. Military members, whether in the active or 
reserve components, must be allowed to compete equally for pay 
and promotion according to their own abilities and should 
receive equal pay for substantially equal work under the same 
general working conditions.
          a. To the extent possible, compensation should be 
        comparable with pay in the American economy.
          b. Compensation should be competitive externally with 
        private sector pay. It should also be competitive 
        internally, to incentivize acquiring skills and 
        accepting challenging assignments, to recognize 
        hardships and danger, and to facilitate the 
        distribution and separation of military members at 
        appropriate times.
    4. Effectiveness. The military compensation and retirement 
systems must be effective in times of peace, war, and other 
levels of conflict. These systems must be robust and assist in 
expanding and contracting the force as appropriate, to include 
the seamless use of reservists and retirees.
    5. Flexibility. The military compensation and retirement 
systems must be flexible to adjust to changing conditions in 
the American economy, to changes in the labor markets, and to 
changes in military force structure requirements. These systems 
should be capable of rapid and equitable adjustments. They 
should facilitate the mobility required to employ the force in 
time of war and in peacetime support the need of force managers 
to professionally develop future military leaders.
    6. Motivation. The military compensation and retirement 
systems should encourage meritorious performance and the desire 
to seek and perform in positions of greater responsibility.
    7. Fiscal Sustainability. The military compensation and 
retirement systems should be fiscally sustainable in order to 
ensure long-term certainty for service members and retirees.
    8. Force Management. The military compensation and 
retirement systems must actively retain the most experienced 
and qualified service members and align compensation and 
benefits to achieve this end. Along with the review of 
compensation the interrelationship of the military's current 
promotion system should be reviewed, as well as associated 
force shaping tools.
    Together, these principles form a useful foundation to 
guide the Commission's review and development of 
recommendations to modernize the military compensation and 
retirement systems.

                                  
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