Can the DoD Reduce Your Military Retired Pay?
Did you know that, in some cases, military retirement pay awarded to a servicemember after leaving the military can be reduced? Military members are entitled to draw their retirement pay for life, but it is subject to reduction or recalculation under certain circumstances after a service member transitions to the civilian world.
Can the DoD Reduce Your Military Retired Pay?
According to 10 U.S. Code 1370 and similar legal authority (including DoD 7000.14-R), there are situations in which a retired military member’s retired rank and/or pay may be reduced. But it’s important to note that 10 U.S.C. 1370 states:
“Except for a conditional determination authorized by subsection (d), a determination of the retired grade of an officer pursuant to this section is administratively final on the day the officer is retired, and may not be reopened” with certain exceptions allowed.
According to DoD regulations, a “final determination of the retired grade of an officer may be reopened” under the following circumstances:
- If the retirement or retired grade of the officer was fraudulent.
- If evidence comes to light after retirement, it could have led to a different retired grade if known by the competent authority at the time of retirement.
- If a mistake of law or calculation was made in awarding the retired grade.
- If there is a good cause to reopen the determination of the retired grade.
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Captain Mark Kelly’s Case
In early 2026, the U.S. Secretary of Defense utilized this authority to initiate a Retirement Grade Determination (RGD) against Senator Mark Kelly, a retired Navy captain. Was this action legal? It remains to be seen how federal courts will interpret 10 U.S.C. 1370
It was immediately challenged in federal court. The Secretary of Defense cited Mark Kelly’s appearance in a November 2025 video advising active-duty troops to refuse unlawful orders as the excuse for a potential demotion. Is this move legal? At press time it has not been ruled upon in federal court.
Legal Authority for Retirement Grade Determination
As mentioned above, 10 U.S.C. 1370 grants the Defense Department the power to determine the highest grade in which a member served satisfactorily, even retroactively in some cases. This statute requires that a commissioned officer serve a specific amount of time (usually three years for grades above O-4) to enter military retirement at that rank.
- If a secretary determines a member’s service at their highest rank was not satisfactory, they can retroactively demote the individual to the next lower rank where service was deemed honorable.
- Under 10 U.S.C. § 1370(f), the government may reopen a “final” retirement grade determination if substantial new evidence of misconduct surfaces or if “good cause” exists. But can the government make a charge like this stick if the “good cause” happened post-retirement?
- Unlike a court-martial, an RGD is an administrative process. It does not require a criminal conviction but relies on the service secretary’s discretion and a review of the official record.
Financial Impact of Rank Reduction
A reduction in grade directly impacts the “High-3” average or final pay calculation used to determine monthly pension checks.
- Pension Recalculation. Because retirement pay is a percentage of the base pay for a specific rank, a drop of even one grade can result in a significant loss. A demotion from O-6 to O-5 typically reduces a monthly pension by nearly $1,000 depending on total years of service.
- Permanent Loss. Over a 20-year to 30-year retirement, a single-rank demotion can cost a retiree hundreds of thousands of dollars in cumulative benefits, as the reduction in retirement pay is permanent.
Related: Using Your VA Loan Benefits as a Veteran
Jurisdiction and the UCMJ
Military retirees remain subject to the Uniform Code of Military Justice (UCMJ) under 10 U.S.C. § 802(a)(4). This legal status distinguishes military retirees from most other federal pensioners.
- Recall to Active Duty. The Department of Defense maintains the right to recall a retiree to active duty to face trial by court-martial for serious offenses.
- Punitive Forfeitures. A court-martial sentence may include forfeiture of retired pay and benefits.
Common Administrative Reductions
Beyond demotion, there are other reasons why military retirement pay could be reduced. Retirees may be required to waive retired pay to receive VA disability compensation unless they qualify for Concurrent Retirement and Disability Pay (CRDP).
Participation in the SBP requires a monthly premium, often 6.5% of the elected base amount, which the government deducts automatically, resulting in a lower amount of retirement pay paid directly to the retiree. The Uniformed Services Former Spouses’ Protection Act allows state courts to garnish up to 50% of a retiree’s disposable pay for alimony, child support, or property division, which is another way retirement pay could be reduced.
Related: Using Your VA Loan Benefits as a Veteran
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
