Temporary Early Retirement Authority (TERA)

Regular Army: Active Duty

Benefit Fact Sheet

Summary:

The FY 2012 National Defense Authorization Act (NDAA), Public Law 112-81, enacted 31 December 2011, authorized the military services to offer early retirement to Soldiers who have completed at least 15 years of active service. This is a discretionary authority and not an entitlement. The Army has elected to use this limited program as part of a comprehensive force management strategy to shape the force. It does not apply to Soldiers of the Army National Guard or the U.S. Army Reserve.

Eligibility:

Early retirement under TERA is limited to active duty Regular Army Soldiers who are denied continued active duty service with an established involuntary separation date of 30 September 2018 or earlier who meet the following criteria:

            a. Noncommissioned Officers (NCOs) denied continued service as a result of an approved Qualitative Service Program (QSP) centralized selection board who are serving on active duty and have completed 15 but less than 20 years of active service as of the established involuntary separation date.

            b. Officers/Warrant Officers who have twice failed selection for promotion to the next grade, including those who have been selected for, but not yet accepted, selective continuation, who are serving on active duty and have 15 but less than 20 years of active service as of their established involuntary separation date.

            c. All Soldiers must meet all eligibility requirements for retirement for length of service for a 20-year retirement, except as provided for under the TERA program.  Exceptions to other eligibility requirements are not considered.  In all cases, early retirement will not occur prior to attainment of 15 years of service on the established separation date.

This early retirement benefit will not be extended to Soldiers who:

            a. Were previously separated under Voluntary Separation Incentive (VSI), Special Separation Benefit (SSB), or Voluntary Separation Pay (VSP) programs.

            b. Are under evaluation for disability retirement under Title 10, Chapter 61.

            c. Are members of the Army National Guard or U.S. Army Reserves.

Benefit Highlights:

TERA retired pay is generally calculated using the same formula that is used for 20-or-more-year retirements, but it includes an early retirement reduction factor. The calculation is 2.5 percent of the average of the highest 36 months of base pay times the number of years of service, times the TERA reduction factor. Reduction factors are based upon the number of months that retirement is taken before the 20-year minimum (1/12th of 1% for each month of early retirement).

 

Temporary Early Retirement Authority (TERA) Retired Pay Reduction Factors

 

Months

Retiring

Early

 

Reduction

Factor

 

Months Retiring Early

 

Reduction Factor

 

Months Retiring Early

 

Reduction Factor

 

Months Retiring Early

 

Reduction Factor

1

.99917

16

.98667

31

.97417

46

.96167

2

.99833

17

.98583

32

.97333

47

.96083

3

.99750

18

.98500

33

.97250

48

.96000

4

.99667

19

.98417

34

.97167

49

.95917

5

.99583

20

.98333

35

.97083

50

.95833

6

.99500

21

.98250

36

.97000

51

.95750

7

.99417

22

.98167

37

.96917

52

.95667

8

.99333

23

.98083

38

.96833

53

.95583

9

.99250

24

.98000

39

.96750

54

.95500

10

.99167

25

.97917

40

.96667

55

.95417

11

.99083

26

.97833

41

.96583

56

.95333

12

.99000

27

.97750

42

.96500

57

.95250

13

.98917

28

.97667

43

.96417

58

.95167

14

.98833

29

.97583

44

.96333

59

.95083

15

.98750

30

.97500

45

.96250

60

.95000

 

Example:

E-7 with 15-years, 7-months, and 13 days of service and a high 36-monthly average basic pay of $3,783.50 would be computed as follows:

RPB - Retired Pay Base (i.e. high 36 monthly average basic pay)
AS - Active Service (in months)
MO - Months in a year
RPF - Retired Pay Percentage Factor
TRF - TERA Reduction Factor (from TERA Reduction Factor table above)

RPB × ((AS ÷ MO) × RPF) × TRF =
$3,783.50 × ((187 ÷ 12) × .025) × .95667 =
$3,783.50 × (15.5833 ×.025) × .95667 =
$3,783.50 × .3896 × .95667 = $1,410.18
(Since this is not a multiple of $1, round down to $1,410.00.)
Reductions for officers are based upon their service beginning on their 1405 service dates.

TERA and the Career Status Bonus (CSB)

Soldiers who entered the military on or after 1 August 1986 are eligible to accept a $30,000 CSB at 15 years of service if they agree to serve at least 20 years. Generally, the retired pay for Soldiers who opt to receive the CSB is calculated at 2 percent of their "retired pay base" (average of highest 36 months of active duty base pay) for each of their first 20 years of service, plus 3.5 percent for each of their next 10 years of service, plus 2.5% for each year of service over 30 years. In addition, cost-of-living adjustments (COLAs) to retired pay are applied at 1% less than increases in the Consumer Price Index (CPI) until age 62, at which time their retired pay is recalculated to the amount it would have been if the full COLAs had been applied since retirement. Thereafter, COLAs are again applied at 1% less than the CPI without further recalculations throughout their retirement. For more information, refer to the Defense Finance and Accounting Service (DFAS) website at http://www.dfas.mil/retiredmilitary/plan/estimate/csbredux.html

Soldiers who have accepted the $30,000 CSB at their 15-year point but who are later approved for early retirement under TERA will not be required to repay the CSB. However, their retired pay will be subject to a reduction factor because of their early retirement. TERA, likewise, has a reduction factor, so both reduction factors are applied.

Example:

Same example as above (E-7 with 15-years, 7-months, and 13 days of service and a high 36-monthly average basic pay of $3,783.50). TERA/CSB retired pay would be computed as follows:

RPB - Retired Pay Base
360 - 30-Years (360-months)
AS - Active Service (in months)
MO - Months in a year
RPF - Retired Pay Percentage Factor
RRF - CSB REDUX Reduction Factor (1%)
TRF - TERA Reduction Factor (from TERA Reduction Factor table above)

RPB × ((AS ÷ MO) × RPF) - (((360 - AS) ÷ MO) ×RRF)) × TRF =
$3,783.50 × ((187 ÷ 12) × .025) - (((360 - 187) ÷ 12) × .01)) × .95667 =
$3,783.50 × ((15.5833 ×.025) - ((173 ÷ 12) × .01)) × .95667 =
$3,783.50 × (.3896 - (14.42 × .01)) × .95667 =
$3,783.50 × (.3896 - .1442) × .95667 =
$3,783.50 × .2454 × .95667 = $888.24
(Since this is not a multiple of $1, round down to $888.00.)

If this Soldier had not taken the CSB, his TERA retired pay would be $1,410.00.

 

Additional Information:

U.S. Public Law 112-81, Section 504, FY 2012 NDAA, 31 DEC 2011

U.S. Army ALARACT 281/2012, DTG R 091426Z OCT 12

Access the MyArmyBenefits calculator to calculate your retirement pay: http://myarmybenefits.us.army.mil/Home/Benefit_Calculators/Retirement.html

For more detailed information on retirement pay, please visit Army Retirement Services Office (RSO) at:

http://www.armyg1.army.mil/rso/

Army Human Resources Command web site:

https://www.hrc.army.mil/

Defense Finance and Accounting Service site at:

http://www.dfas.mil/

Document Review Date: 11 July 2013