Members of the Naval Reserve can retire after 20 countable years. Calculating pensions for the Reserve Is not quite as simple as calculating pensions for retired sailors, but the actual math is simple and not too complicated to calculate a pension for the Naval Reserve when you understand the factors associated with it.
The most difficult part of calculating pensions for the Naval Reserve is understanding the difference between three similar “years of service” provisions: pension benefits, basic salary, and pension percentage.
Step 1: Determine if you are eligible for retirement
Your 20 years of countable service can be a combination of years of on-duty and in the Reserve. To be able to count a year in the Naval Reserve, you must accumulate 50 points of service that year. Service points are accumulated as follows:
- 1 point per day is for active service.
- 1 point for each day of funeral honors.
- 1 point every time you join the rehearsal.
- 15 points for each year you have experienced in the Naval Reserve unit.
Step 2: Determine if you are eligible for retirement withdrawals
Unlike enlisted sailors, Navy Reserve retirees cannot withdraw their pensions until they are 60 years old. Those who have been called up for enlistment during their stay in the Reserve at any time after January 28, 2008, can subtract the three months of age they can retire for each consecutive 90-day period in which they have been in the army. Between retirement and the start of your pension, you continue to accumulate as many years of service as when you were in office. In most cases, this means that you will retire with significantly more time on salary than the time you have actually served actively or in the Reserve.
Step 3: Determine whether to use a 36 or final high-paying plan
If you entered military service – including importing R.O.T.C. or Naval Academy – before September 8, 1980, you use the Final Pay Packet. This program uses your highest salary to determine your base salary in retirement.
Everyone else uses a high Plan 36, using an average of 36 months of your highest base salary. For most, this will be your last three years of service, although this may change if you have spent a significant amount of time on the task of enlistment.
Step 4: Calculate the number of years of your work to pay the basic salary
Add up all the years you’ve been on military duty, the number of days you’ve served in the army while in the Naval Reserve (e.g., when you were called into the army, called an ambulance, and the duration of your rehearsals and training) and the amount of time you spent in the “gray zone” from stopping using the Reservation Service to receiving reserve payments.
Step 5: Calculate your years of service for the pension percentage
The percentage for your years of service to a pension is 2.5 per cent which is equal to the number of years served on the base salary. A retiree from the Naval Reserve with 20 years of service has a pension percentage of 50%. If you have 30 years of service, that number becomes 75 percent.
Step 6: Calculate your retirement
Take your base salary from the High Salary 36 or Final salary options by the percentage of your retired salary to calculate your pension.
Example: Final payment plan
If you entered R.O.T.C. aged 18 in 1979 and served 30 years in the Naval Reserve, retiring in 2009 as Captain (O-6), when you turn 60 in 2021, you will be eligible to withdraw your retirement. You will be on the Final Pay Plan because you joined the service before 1980. Assuming you participate in regular exercises, you have 30 years of service that can be counted. If you spent two years deployed to the Persian Gulf in 2008 and 2009 and spent an average of 40 days per year in the army (1,120 days in total) in the remaining years, you determine the number of years of your service to get basic pay by plus two years of your deployment period to 1,120 days (three years) and the number of years spent in the gray area – 12 if you retire at the age of 60 in 2021. This gives you a total of 17 years of service with a basic salary. Your final payment is $8,822.40 based on the current pay scale. Your pension percentage is 42.5 percent (17 years x 2.5 percent). Your pension is $8,822.40 x 42.5 percent, or $3,749.52.
Example: High Plan 36
If you joined the Naval Reserve at the age of 20 in 1990, attended all the exercises, and retired from the Reserve position in 2010 as Director Petty (E-7) with a year at that rank and two years as an E-6, you can start calculating retirement at age 60 by 2030. You will use the High-36 method to determine your base salary from the highest-paid 36 months. Assuming an average of 40 days of operation per year and no implementation, you’ve had more than 2 years (800 days) of activity. Plus 20 years you will spend in the gray area and you have 22 years of service with a basic salary. Your pension percentage is 55 percent (22 years x 2.5 percent). You determine your pension by taking the average of the highest 36 months of basic salary and by the same as 55 percent.