The compensation caps for contractors are part of the 2012 National Defense Authorization Act, which was passed by the Senate on Thursday and is expected to be signed into law by President Obama. (Navy)
A change in federal law to keep experienced officers in uniform allows top generals and admirals to make more in retirement than they did on active duty, Pentagon and congressional records show.
The new pension rules were part of the 2007 Defense Authorization Act to address concerns that the military would lose too many experienced generals and admirals during wartime.
Before the change, the maximum pension was based on an officer's pay at 26 years of service. Now, a four-star officer retiring in 2011 with 38 years' experience would get a pension of about $219,600, an increase of $84,000, or 63 percent beyond what was previously allowed. A three-star officer with 35 years' experience would receive about $169,200, an increase of about $39,000, or 30 percent.
The highest pension, $272,892, is paid to a retired four-star officer with 43 years of service, according to the Pentagon. Before the law was changed, the typical pension for a retired four-star officer was $134,400. The top pay for an active-duty officer is capped at $179,900; housing and other allowances boost their compensation by another third.
"These changes cumulatively provide consistent recognition across an individual's entire career, not just the first 26 years of service," Pentagon spokeswoman Eileen Lainez said. "This recognition also translates into increased readiness through the increased retention of our most experienced leaders."
The Project on Government Oversight, which looks at waste in government, said the pensions were too much.
"At a time when the Pentagon is struggling to pay for the men and women who actually fight wars, and is shrinking the size of its fighting force and civilian employees, it doesn't make sense to nearly double the size of a retired four-star's pension," said Nick Schwellenbach, director of investigations for the group.
Defense Secretary Leon Panetta has said that retirement benefits will have to be re-examined in light of lean budgets in coming years.
There are 146 three-star officers and 44 four-star officers receiving the higher pensions.
Increasing pension payments to the most-senior officers is unlikely to encourage them to stay in the military, said Beth Asch, an expert at the Rand Corp. But, she said, it may entice younger officers to remain in the military if the future payoff for doing so is substantial.