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Your 2003 Military Pay and Benefits
FY 2003 Defense Authorization Act
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2003 Pay and Benefits
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The House and the Senate have passed the FY2003 Defense Authorization Act (HR 4546), and presented it to the President for his consideration on November 26th. The President signed the act into law on December 2, 2002.

So, what do Congress and the President have in store for you this year?

Base pay
(Section 601 of the Defense Authorization Act)

As expected, Congress has approved, without change, the base pay increases proposed by the Bush Administration. This means that all service members will receive a minimum base pay raise of 4.1 percent. Some members (mostly mid-level officers and mid-to-senior level NCOs) will receive an even greater "targeted" raise, ranging from 5 percent to 9.5 percent. This means the so-called "pay-gap" between average military wages and average civilian wages will shrink from 7.5 to 6.5 percent. Additionally, the act requires that minimum pay-raises in the future (until at least 2006) be above the average wage-increases for civilian jobs.

Military members who will receive "targeted" raises above 4.1 percent are:

of Service
of Raise
of Service
of Raise
O-6/14 6.5 W-2/14 5.5
O-5 under 2 8.5 W-1/6 6.0
O-5/8 6.5 W-1/8 6.0
O-5/10 8.5 W-1/10 5.5
O-5/12 6.5 W-1/12 5.5
O-4 under 2 9.5 E-9/20 6.0
O-4/8 5.5 E-9/22 6.0
O-4/10 5.5 E-9/24 6.0
O-4/12 5.5 E-9/26 6.5
O-4/14 5.5 E-8/18 6.5
O-3/4 5.0 E-8/20 6.0
O-3/6 5.0 E-8/22 6.0
O-3/8 5.0 E-7/14 6.5
O-2E/4 5.0 E-7/16 6.0
O-2E/6 5.0 E-7/18 5.0
O-2E/8 5.0 E-6/8 6.5
W-3/14 6.0 E-6/10 6.0
W-3/16 6.0 E-6/12 6.0
W-3/18 6.0 E-6/14 5.5
W-3/20 6.0 E-5/6 6.5
W-2/10 5.5 E-5/8 6.0
W-2/12 5.5 E-5/10 6.0

The base pay raise will be effective on January 1, 2003, which means that military members should see the raise in their January 15th paycheck.

Basic Allowance for Housing (BAH)

(See 2003 BAH Charts). Housing allowance rates have increased by an average of 8 percent over 2002 rates. As a National Survey has shown that rental rates around military bases have risen an average of 4.2 percent during the past year, the average out-of-pocket housing expenses for military members will drop from 11.3 percent to 7.5 percent. This is part of a DOD plan to reduce average out-of-pocket expenses to zero by the year 2005. In 2000, average out-of-pocket costs were 20 percent, reduced to 15 percent with the raise for 2001, and 11.3 percent in 2002. Housing allowance rates are based upon rank, location, and whether or not a member has dependents. The new rates will be effective on January 1st.

Basic Allowance for Subsistence (BAS)

Since 1998, BAS annual increases have been limited, by law, to one percent. Last year, Congress amended the law to eliminate that provision and tie BAS annual increases to the inflation rate as measured by the Agriculture Department's Food Cost Index. While the official increase won't be announced by the Agriculture Department until mid-December, the increase is widely expected to be 2 percent. That would result in the monthly BAS for enlisted members to increase by about $4.83 to $246.43 per month, and by about $3.33 per month for officers (commissioned and warrant) to about $169.70.

A new provision in the law entitles enlisted members to receive double the BAS rate if they are assigned to government quarters without cooking or food storage (refrigerator) facilities, and there are no government meals available. That means enlisted members in this category would be entitled to about $492.86 per month for BAS.

The new BAS rates will be effective on January 1st. The provision that allows double-BAS will be effective on the date that the President signs the bill into law. (See FY 2003 BAS Chart)

Enlistment/Reenlistment Bonuses
(Section 614)

(See Bonus Charts) As in previous years, Congress has continued the authority for the services to pay enlistment and reenlistment bonuses for both active duty and reserve forces. Congress traditionally only grants this authority for one year at a time. The previous authority runs out on December 31, 2002. The new provision extends the authority to December 31, 2003.

Retiree COLA

Like Social Security, military retired pay increases automatically each year based on the rise in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the prior fiscal year. This year's increase in the CPI-W was 1.4 percent. The increase will be effective on January 1, 2003, and should be seen in January retiree paychecks.

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