Higher Grade Determination Retirement Pay Computation

Does anyone know how retirement pay is computed after the Army Grade Determination Review Board (AGDRB) approves a higher retirement grade than what you last served as? Specifically, I would like to know how DFAS computes the High 36. Is it from your last 36 months of service? From your last 36 months you held that higher rank? Is it from active duty pay only? Are there any COLA adjustments?

Specifically, in my case, I'm currently serving as a SSG/E6, but am medically retiring as a MAJ/O4. I resigned my commission in NOV 2020, so my last 36 months of being a MAJ/O4 were DEC 2017-NOV 2020; however not all of those months were on active duty orders as I was in the Reserve. I have over 20 years of active service, over 10 years (18 years) as a commissioned officer, and more than 6 months (9 years) as a MAJ/O4. The AGDRB ruled my disability retirement pay will be computed as a MAJ/O4.

The problem is that no one at Fort Bragg Transition Office or Post Retirement Office seems to truly know the correct answer and DFAS won't help me until after they've done the computation.

***For archival purposes: in going through IDES, it took the AGDRB 90 days to determine my retirement grade. Unfortunately, it's not done until the PEB is complete and the Soldier has signed their DA Form 199 so that's an additional 90 days of waiting. Upon that determination it's sent to the PEB and TRANSPROC where they give you an additional 90 days to separate.
 
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I'm not sure about the reserve stuff... but the way I understand it is DFAS doesn't use your rank/grade. They use the 36 months of pay that were your actual highest paid.

For instance, if you were an E9 and got reduced to E7 without being administratively separated and remained on active duty for a times period while waiting for retirement approval... the last months you were being paid would be at the E7 rate. For retirement purposes this person gets a DD214, orders, etc as an E7, but DFAS will use the actual pay data they have. The pay data says this person was paid the highest in these 36 months regardless of what the person leaves service as and they use those months to determine retirement pay. In this case the person had 36 months paid as an E9 and the pay over those 36 months are all different due to COLA and Time in Service (E9 over 20, over 22, etc). That is why it is an average and not just the last 3 years but usually a person's last 36 months are their highest paid.
 
Years ago I had a friend who was a SSG when he retired and did the same he had resigned his commission due to just being burnt out with the O-side. He was in the same boat and was National Guard/Army Reserves his whole career minus a few slivers of active duty time. When he started to receive his retirement at age 60 he was paid as a CAPT/O-3. This was the highest rank he held before resignation and since his resignation was of his own request and not due to punishment he retired as a CPT. Was the most laid back dude I ever met who was just happy to show up and help since his retirement was locked in as an Officer. Had another guy I knew do the same but with the Warrant side. He made it to LTC and was looking at non-select on the DA board and switched over to warrant and retired as a CW3 but his retirement pay and order say LTC for pay purposes.
 
I would love to hear from someone who knows for sure or who has even gone through it themselves. This is what I was told by the 88th Readiness Division Retirement Counselor previously, but have heard greatly disparate information.

"When you retire and they calculate the rate based off of high 3 it will be Major and the last 3 years, even though you would be Enlisted, you served so in your situation O4 pay for
2022-2025 because it looks at your total service."
 
DFAS calculates the retired pay base by using the 36 months during which the Soldier earned their highest rates of basic pay, regardless of when those months occurred in the timeline of the Soldier's period of service. The applicable regulatory provision is below, as is a link to the regulation.


DoD Financial Management Regulation, DoD 7000.14-R, Vol. 7B, Ch. 3 (Sep. 2024)

2.0 BASIC COMPUTATION
2.1 Overview
In most cases, retired or retainer pay is the product of multiplying the retired pay base by the years of service multiplier. In some military disability retirement cases, retired pay is the product of multiplying the retired pay base by the percentage of disability determined by the military service.
2.1.1. Retired Pay Base. The retired pay base is determined by using the active-duty basic pay entitlement of the member.
2.1.1.1. Pre-September 8, 1980 Member. For individuals who first became members before September 8, 1980, the retired or retainer pay base is the basic pay of the member on the day before retirement. See paragraphs 2.2 through 2.6 for exceptions.
2.1.1.2. Post-September 7, 1980 Member. For individuals who first became members after September 7, 1980, the retired or retainer pay base is the average of the highest 36 months of basic pay received.
2.1.1.2.1. The retired pay base for a member with 36 or more months of active service is the average monthly basic pay the member received over their highest earning 36 months. In the case of a Reserve component member, this is the total amount of basic pay to which the member was entitled during the member’s high 36 months or to which the member would have been entitled if the member had served on “active duty” during the entire period of the member or former member’s high 36 months. Only months during which the individual was a member of a uniformed service may be used. Starting with the highest rate of pay, add together the monthly basic pay amounts until the total number of months equals 36 months. Divide the total pay derived from the sum of months by 36, and round to the nearest cent to obtain the retired pay base applicable to the member. Any lost time the member had is not to be included in the computation.
 
RetiredAtty said:
DFAS calculates the retired pay base by using the 36 months during which the Soldier earned their highest rates of basic pay, regardless of when those months occurred in the timeline of the Soldier's period of service. The applicable regulatory provision is below, as is a link to the regulation.


DoD Financial Management Regulation, DoD 7000.14-R, Vol. 7B, Ch. 3 (Sep. 2024)

2.0 BASIC COMPUTATION
2.1 Overview
In most cases, retired or retainer pay is the product of multiplying the retired pay base by the years of service multiplier. In some military disability retirement cases, retired pay is the product of multiplying the retired pay base by the percentage of disability determined by the military service.
2.1.1. Retired Pay Base. The retired pay base is determined by using the active-duty basic pay entitlement of the member.
2.1.1.1. Pre-September 8, 1980 Member. For individuals who first became members before September 8, 1980, the retired or retainer pay base is the basic pay of the member on the day before retirement. See paragraphs 2.2 through 2.6 for exceptions.
2.1.1.2. Post-September 7, 1980 Member. For individuals who first became members after September 7, 1980, the retired or retainer pay base is the average of the highest 36 months of basic pay received.
2.1.1.2.1. The retired pay base for a member with 36 or more months of active service is the average monthly basic pay the member received over their highest earning 36 months. In the case of a Reserve component member, this is the total amount of basic pay to which the member was entitled during the member’s high 36 months or to which the member would have been entitled if the member had served on “active duty” during the entire period of the member or former member’s high 36 months. Only months during which the individual was a member of a uniformed service may be used. Starting with the highest rate of pay, add together the monthly basic pay amounts until the total number of months equals 36 months. Divide the total pay derived from the sum of months by 36, and round to the nearest cent to obtain the retired pay base applicable to the member. Any lost time the member had is not to be included in the computation.
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Is this for personnel advanced to a higher grade though? How about the regulatory provision of DoD Financial Management Regulation, DoD 7000.14-R, Vol. 7B, Ch. 9 (Feb. 2025) that states the following:

3.4 Recomputation of Retired Pay
A member of the armed forces advanced on the retired list is entitled to a recomputation of retired pay by:

3.4.1. Using the rate of monthly basic pay for the grade on the initial date of retirement or transfer if the member first entered a Uniformed Service prior to September 8, 1980, or using the high 36 months retired pay base if the member entered a Uniformed Service after September 7, 1980;

3.4.4. Applying all applicable cost-of-living adjustments from the date of initial retirement or transfer
 
So what’s the tie up in the question then? Sounds like you got your answer from the retirement counselor. Is it just not believing that you will retire at the high three of Major? I work as a Readiness NCO and have physically examined the 214 and retirement statement for the CW3 and both documents list LTC on it for pay purposes even though he hadn’t held the rank for ten years from when he resigned it and went Warrant. He also retired off of active duty when they did his pay computation.
 
Although I’m not an expert on this and I’m only basing this conclusion on the facts as you present them on this site, as an enlisted member of the Reserve Component, it does not appear that you are eligible for advancement on the retired list. See Army Reg. 15-80, ¶ 3-2.a; 10 U.S.C. § 7344. DoD 7000.14-R, Vol. 7B, Ch. 9 appears to be inapplicable to your case. In addition, any eligibility for advancement on the retirement list for an active duty enlisted Soldier occurs only after the Soldier has a total of 30 years of active duty service and service on the retired list and after the Soldier applies for it using the AGDRB highest grade served determination made at retirement. If the retired pay at the advanced grade is less than the prior grade, the Soldier has the option to decline the advancement.

The Army Grade Determination Review Board decision was apparently done in your case because you are being retired due to a disability. See Army Reg. 15-80, ¶ 3-1.a. That action determines your grade for placement on the Permanent Disability Retired List and for your retirement status such as ID card etc. However, your grade at retirement does not affect the retired base pay rate, which is as previously noted calculated using the high-36 methodology.
 
Almostthere86 said:
So what’s the tie up in the question then? Sounds like you got your answer from the retirement counselor. Is it just not believing that you will retire at the high three of Major? I work as a Readiness NCO and have physically examined the 214 and retirement statement for the CW3 and both documents list LTC on it for pay purposes even though he hadn’t held the rank for ten years from when he resigned it and went Warrant. He also retired off of active duty when they did his pay computation.
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The tie up is the disparate answers I've gotten from many so called "experts." Trying to get verifiable factual confirmation from someone who has experienced it first hand or is a DFAS expert.
 
RetiredAtty said:
Although I’m not an expert on this and I’m only basing this conclusion on the facts as you present them on this site, as an enlisted member of the Reserve Component, it does not appear that you are eligible for advancement on the retired list. See Army Reg. 15-80, ¶ 3-2.a; 10 U.S.C. § 7344. DoD 7000.14-R, Vol. 7B, Ch. 9 appears to be inapplicable to your case. In addition, any eligibility for advancement on the retirement list for an active duty enlisted Soldier occurs only after the Soldier has a total of 30 years of active duty service and service on the retired list and after the Soldier applies for it using the AGDRB highest grade served determination made at retirement. If the retired pay at the advanced grade is less than the prior grade, the Soldier has the option to decline the advancement.

The Army Grade Determination Review Board decision was apparently done in your case because you are being retired due to a disability. See Army Reg. 15-80, ¶ 3-1.a. That action determines your grade for placement on the Permanent Disability Retired List and for your retirement status such as ID card etc. However, your grade at retirement does not affect the retired base pay rate, which is as previously noted calculated using the high-36 methodology.
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I appreciate you digging into this. For the record, I'm currently enlisted on active duty. And yes, the AGDRB decision was done because it is a Chapter 61 medical retirement so I didn't have to wait to the 30 year mark. We'll see what DFAS actually calculates (should know in the next 60 days), I may have to file another ABCMR appeal to correct the injustice if the 88th RD retirement counselor was wrong as that's why I resigned my commission. FYSA, here is what the grade determination board memo provided.

Screenshot 2025-04-22 172544.png
 
Call DFAS. They will tell you that when your high 3 pay is calculated they look at your entire time in the military. They take the 36 months that you were paid the highest and get an average regardless of rank. So if you were paid as a major at one point your high 3 average will include that pay.
 
iamthewalrus016 said:
Call DFAS. They will tell you that when your high 3 pay is calculated they look at your entire time in the military. They take the 36 months that you were paid the highest and get an average regardless of rank. So if you were paid as a major at one point your high 3 average will include that pay.
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I've called DFAS. They won't help me until at least 30 days after they get my orders where I can then request a pay inquiry and they'll provide me a breakdown. However, by then it will be too late to get the Fort Bragg Transition Office to amend my orders to fix any issues. As such, I'd have to go through the ABMCR which currently has a backlog of over 18 months.
 
While I did not have to go through an AGDRB, I did have an enlisted to officer pay issue right out of the gate as a Chapter 61 retiree that allows me to answer many of your questions.

Is it from your last 36 months of service? No, it is from your highest 36 months of pay.

From your last 36 months you held that higher rank? Yes, if that period was your highest 36 months of pay.

Is it from active duty pay only? No. While I have a mix of active duty and guard time, my highest 36 months was during guard time. And even during that time I had waived all my guard pay for VA pay.

Are there any COLA adjustments? Yes

In my opinion the key will be in ensuring your Chapter 61 order reads the correct rank and grade. I actually had direct communication with the gentleman cutting the order. That may also be the office you should speak with to ensure everything is correct before your final date.
 
DaveK said:
While I did not have to go through an AGDRB, I did have an enlisted to officer pay issue right out of the gate as a Chapter 61 retiree that allows me to answer many of your questions.

Is it from your last 36 months of service? No, it is from your highest 36 months of pay.

From your last 36 months you held that higher rank? Yes, if that period was your highest 36 months of pay.

Is it from active duty pay only? No. While I have a mix of active duty and guard time, my highest 36 months was during guard time. And even during that time I had waived all my guard pay for VA pay.

Are there any COLA adjustments? Yes

In my opinion the key will be in ensuring your Chapter 61 order reads the correct rank and grade. I actually had direct communication with the gentleman cutting the order. That may also be the office you should speak with to ensure everything is correct before your final date.
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Thanks. I'm going to DM you for more info.
 
So I've been doing lots of research and found this bit in the Air Force's current Retirement AFI, 36-3203. It states:

"Officers who resign officer commissions and retire in enlisted status will have retired pay calculated in accordance with 10 USC § 1407(e). (T-0) DFAS is required to calculate the high36 month average as if the member held the retired grade for the last 36 months of active service."

What do you all think of this?

DAFI36-3203 29 JANUARY 2021
 
PolloxTroy08 said:
So I've been doing lots of research and found this bit in the Air Force's current Retirement AFI, 36-3203. It states:

"Officers who resign officer commissions and retire in enlisted status will have retired pay calculated in accordance with. 10 USC § 1407(e) (T-0) DFAS is required to calculate the high36 month average as if the member held the retired grade for the last 36 months of active service."

What do you all think of this?

DAFI36-3203 29 JANUARY 2021
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That is a tough one. I tried researching it, but kept coming back to the same conclusion... I may be in correct, but it appears to state that the last 36 months calculation would be based on the enlisted rank at retirement and not the former officer rank. Need to find the same regulation but in reverse.
 
Well I tricked AI into staring this...but without any corresponding evidence link.

"Yes, when a member's commission is restored, DFAS is required to recalculate their High-36 month average as if they had held the retired grade for the last 36 months of active service. This means the calculation will use the pay rates associated with that retired grade for the final 36 months, not the pay grade they actually held during that time."
 
DaveK said:
That is a tough one. I tried researching it, but kept coming back to the same conclusion... I may be in correct, but it appears to state that the last 36 months calculation would be based on the enlisted rank at retirement and not the former officer rank. Need to find the same regulation but in reverse.
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You're probably right. I think the AFI is just worded poorly as 10 USC 1407e is the exception to the High 36 law that initially screwed me by not allowing me to get my retirement pay calculated from my officer pay.
 
DaveK said:
Well I tricked AI into staring this...but without any corresponding evidence link.

"Yes, when a member's commission is restored, DFAS is required to recalculate their High-36 month average as if they had held the retired grade for the last 36 months of active service. This means the calculation will use the pay rates associated with that retired grade for the final 36 months, not the pay grade they actually held during that time."
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I had AI say something similar talking about "current pay structure," but I could not find that verbiage in any source documentation. Very frustrating. I appreciate you looking though.
 
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