The Accrual Method For Funding Military Retirement
Subtitle: Assessment and Recommended Changes (2001)
Publisher: RAND Corporation
Published: July 25, 2001
Language: eng
Format: Paperback
Number of pages: 80
ISBN-13: 9780833027078
Subjects: Military life & institutions; Welfare & benefit systems; Military pensions; Armed Forces; Politics / Current Events; Government - U.S. Government; Military; USA; Non-Classifiable; Appropriations and expenditure; Accrual basis accounting; Appointments and retirements; United States
First sentence: Until 1984, the amount appearing in the Department of Defense (DoD) budget under military retirement was the annual amount paid to current retired military personnel or their survivors.
Description: Prior to 1984, military personnel force managers had little incentive to control retirement budgets and payments, which equaled $16 billion in 1984, since any decisions made would not be reflected in budgets for 20 or more years. Congress directed the Department of Defense in 1984 to switch to an accrual method for accounting for military retirement in the budget process that would replace the current outlays for retirement in the DoD budget with an amount that reflected the present value of the estimated cost of future retirement benefits earned by each incoming cohort of personnel. The accrual method has helped improve management of retirement benefits and liabilities, but has failed so far to produce either better estimates of retirement costs or effective incentives for better management of the force structure. The authors provide recommendations that would improve cost estimation and increase accountability for force-management decisions.