Making the Reserve Retirement System Similar to the Active System: Retention and Cost Estimates

摘要

RAND Arroyo Center analyzed how offering a retirement annuity immediately to vested reserve component (RC) members, both enlisted personnel and officers, would affect RC participation, as well as active component (AC) retention, both in the steady state and during the transition period. We also estimated the change in personnel costs in the steady state and considered how quickly RC participation and AC retention would change if currently serving RC members were given a choice between the two retirement systems. Because it describes the underlying decision process by which members choose to stay in or leave the AC or stay in or leave the RC, the dynamic retention model (DRM) was used to simulate and evaluate the retention effects of policies that have yet to occur. The model is designed to show the supply response to the policy change and therefore the effect on participation and retention if all who voluntarily choose to stay in the AC or to participate in the RC were permitted to do so. The advantage of modeling these voluntary behaviors is that we can identify the changes that could occur if they were allowed to do so, in the absence of other policy interventions. At the same time, personnel management actions could be designed, targeted, and implemented to limit or regulate the voluntary choices, consistently with the Army s desired force size and shape. We find that RC participation among those with prior AC service increases in the midcareer because of the greater value of RC retirement benefits when vested members can claim benefits immediately. For those with more than 20 years of AC and RC service, two effects operate. On the one hand, a member would have a stronger incentive to leave because he or she can claim RC retirement benefits immediately; on the other hand, a member could increase his or her retirement benefit by staying longer.