U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

29–011 2013

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 


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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. 


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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 reVerDate Mar 15 2010 02:19 Sep 13, 2013 Jkt 029011 PO 00000 Frm 00005 Fmt 6601 Sfmt 6601 E:\HR\OC\HD060.XXX HD060

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tirees 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. 


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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. 

Æ 


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