Military Pay Archives

Beginning January 1, 2015, the DOD is changing its policy on allotments.

For years, the Department of Defense (DOD) and the Defense Finance and Accounting Service (DFAS) have allowed service members to automatically redistribute their paychecks. Service members use the allotments to redirect funds to different accounts in order to pay their bills, before they have the opportunity to miss the money, or forget to pay their debt.

With the change on the 1^st of the year, service members will no longer be able to use allotments to purchase, lease, or rent consumer items. The policy change will apply to any “tangible and movable” personal property, including cars, motorcycles, boats, furniture, laptops, tables, televisions, cellphones, appliances and more.

Other types of allotments will not be affected, such as those going to family members, savings accounts, to pay insurance premiums, mortgages or rent, charities and investments. The policy change will also not apply to military retirees or DOD civilian employees or to any current allotments that are in place to pay for items on credit.

Over the last several years, there have been an increasing number of documented abuses of the system by vendors. Service members were lured into purchasing items they couldn’t afford, using allotments in deals that often misrepresented the total cost of the item to the buyer.

While there are those who will blame the foolishness of the duped service members for the change, the fact is that there are too many unscrupulous companies out there looking to take advantage of people, especially service members. Because of their commitment to our country, many modifications and exceptions are made for service members, in order to make their lives easier and thank them for their service. Allotments are one of these modifications. Unfortunately, too many predatory companies have been using this modification to benefit themselves, with the men and women in uniform paying the price.

An interagency review of the allotment system revealed that three of the top ten allotment processors in fiscal 2012 were flagged by state law enforcement, consumer advocates and financial regulators as suspected abusers. Those companies received 999,588 allotments in 2012, totaling $1.4 billion.

Starting next year, when setting up an allotment, service members will have to certify that “Under penalty of the Uniform Code of Military Justice, I certify that this allotment is NOT for the purchase, lease, or rental of personal property or payment toward personal property.” Refusal to accept that certification will disallow the new allotment.

The new policy may seem like it will limit service members’ ability to afford items, and in truth, for some it will. But the change will give service members critical new protections against those who are intent on ripping them off.

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Military Connection: DOD to Change Allotment Policy: By Debbie Gregory

For the second year in a row, the White House is telling Congress that the president intends to cap the military basic pay raise at 1%.

Last year, leading into the “Government Shutdown,” a hot ticket item was the capping of service members’ pay at 1%. This year, President Obama notified Congress that he again is recommending a lower than private-sector wage growth for the men and women who serve in the military. The increase was the lowest basic pay raises since the dawn of the all-volunteer-military era in 1973.

Ongoing budget constraints are being blamed for the cap. But Congress could override the 1% cap and mandate a 1.8 % pay raise for 2015. The 1.8% increase would be more in line with the anticipated rise in private-sector wages.

So far, members in the House have favored a 1.8 % increase, while votes in the Senate have been found to favor the 1% increase. Reaching a compromise on the competing budget bills will likely take the rest of the year.

Many Veteran advocacy groups have insisted that a lower pay increase will negatively impact future military recruiting and destroy the military’s retention efforts. Military advocates are still hopeful that they can sway Congress to support the 1.8% increase, even if it means adding $3.8 billion to the federal deficit over the next five years.

To put the issue in terms of dollars and cents for individual service members, the difference in the two pay plans would be about $195 a year for an E-3 with three years of service. For an E-7 with 10 years, it comes out to $356. For an O-5 with 12 years of service, the lower pay plan would drain about $667 in annual salary.

While the individual sums could be considered small, in the grand scheme of things, for those who have served and the families that they support, it makes a world difference… especially as a matter of principle.

Military families already go without so much. The typical service member’s wages are far lower than a civilian with similar training and experience. Military pay is supplemented by benefits in healthcare and on-base shopping. But the lower earning potential affects a military family’s ability to rent, buy or lease homes and property, and is also a blow to morale.

The majority of active duty, Guard and Reservist service members have endured multiple deployments over the past decade. The men and women still in uniform can expect more deployments, especially as our leaders consider their options regarding ISIL, and as they track the tensions between Russia and Ukraine.