Career Status Bonus (CSB)/REDUX

Members who entered the service after July 31, 1986, but before January 1, 2018, are given a choice of two retirement plans when they reach their 15th year of active service:

High-3 Year Average, or
Career Status Bonus (CSB)/REDUX

Military members who elected CSB/REDUX are eligible to receive a $30,000 bonus when they reach their 15th year of active service but will also have their retired pay calculated at a reduced rate.

CSB/REDUX is a two-part agreement. It includes the $30,000 bonus, but also results in reduced retired pay. While the $30,000 Career Status Bonus may seem like an incentive now, it is important to be aware of the effects electing to retire under CSB/REDUX have on your retired pay.

CSB/REDUX Retired Pay Calculation

Retirement Calculator

Your monthly pay may differ from the calculator’s estimate. The formulas used to calculate retired pay are complex and differ depending on individual circumstances.

CSB/REDUX Retirement Calculator

Regular (Non-Disability) retirees have their percent multiplier for computing gross retired pay reduced by:

1 percent for each full year of creditable service less than 30, and
1/12th of 1 percent for each full month of creditable service less than a full year.

Cost of Living Adjustments (COLA) are also reduced by one percent.

This reduction in the percent multiplier for computing gross pay remains in effect up to the age of 62. Once you reach age 62, your retired pay will be restored to the same amount paid under the High-3 System. Full COLA rates will be applied to your new computation, but the COLA will continue to be applied at the reduced rate each year following.

Please see below for information regarding Disability Retirees and Reserve/Guard retirees who elected CSB/REDUX.

Read more about CSB/REDUX on the DoD website.

Reserve/Guard Members Retiring with a Non-Regular Retirement (Retired Pay at Age 60 or with a Reduced-Age Retirement)

Reserve/Guard members retiring at age 60 (or younger, if eligible) who elected CSB/REDUX are NOT subject to the reduction of the percent multiplier for computing gross pay under age 62. However, they ARE subject to the 1 percent COLA reduction.

Disability Retirees Who Elected CSB/REDUX

Disability Retirees who elected CSB/REDUX are NOT subject to the reduction of the percent multiplier for computing Disability Gross Pay. However, they ARE subject to the 1 percent COLA reduction.

Computing Disability Gross Pay

Unlike computing gross pay for a non-disability retirement for a member who previously elected CSB/REDUX (see information above), when DFAS computes the gross pay for Disability Retired Pay for a member who elected CSB/REDUX, there is NO reduction of the multiplier.
Gross Disability Retired Pay is computed using either:

Method A: the percentage of disability assigned; or
Method B: the years of creditable service times 2.5 percent.

The CSB/REDUX election does not impact the multiplier for either Method A or Method B gross Disability Retired Pay computation.

However, members who have a disability retirement and previously elected CSB/REDUX will receive the reduced COLA for the rest of their life.

Disability Retirees Who Elected CSB/REDUX and are Eligible for Concurrent Retirement and Disability Pay (CRDP)

If a Disability Retiree is eligible for CRDP, once the most-beneficial method of calculation and gross Disability Retired Pay are determined, the next step is to compute the amount of their Concurrent Retirement and Disability Pay (CRDP) exemption. The CRDP exemption is amount of gross Disability Retired Pay that is exempt from the VA Waiver.

As you may know, the law requires that a military retiree waive a portion of their gross DoD retired pay, dollar for dollar, by the amount of their Department of Veterans Affairs (VA) disability compensation pay; this is known as the VA Waiver (or VA offset).

Some retirees who receive VA disability compensation may also be eligible for the CRDP exemption or CRSC payments that make up for part or all of the DoD retired pay that they waive to receive VA disability compensation.

There are limits on the amount of the Concurrent Retirement and Disability Pay (CRDP) exemption for Chapter 61 Disability Retirees. This means there are limits on the amount of gross Disability Retired Pay that is exempt from the VA Waiver for some Disability Retirees.

The law limits the amount of gross Disability Retired Pay that is exempt from the VA Waiver due to CRDP entitlement for a Chapter 61 Disability Retiree to the amount they would have been entitled to IF they had NOT retired for disability.

Remember, the years of service multiplier is reduced when computing gross pay for non-disability retirees under age 62 who chose CSB/REDUX. Therefore, gross retired pay is reduced for non-disability retirees who chose CSB/REDUX until age 62.

This means, due to the fact that some members retired based on disability and chose the CSB/REDUX option, these members receive higher gross Disability Retired Pay because it is calculated based on their years of service and NOT subject to CSB/REDUX reduction. However, the CRDP exemption is limited to the amount their non-disability retired pay would be WITH the CSB/REDUX reduction.

Therefore, the amount of the Concurrent Retirement and Disability Pay exemption a Chapter 61 Disability Retiree who chose CSB/REDUX is entitled to may be less than the amount they would have been entitled to if they had not retired under a Chapter 61 Disability Retirement law.

For members who are retired because of physical disability and who elected to take CSB/REDUX, the amount of retired pay exempt from the VA Waiver because of entitlement to CRDP cannot be higher than it would have been if they had retired as a regular retiree (and their gross pay had been subject to the reduction of the multiplier and COLAs).

Therefore, to determine the amount of Disability Retired Pay that is exempt from the VA Waiver because of CRDP entitlement, we first need to calculate the “hypothetical longevity retired pay.”

How We Calculate the Hypothetical Longevity Retired Pay for Disability Retirees Who Elected CSB/REDUX

Hypothetical longevity retired pay is the amount of retired pay after the required CSB/REDUX reduction of the multiplier and COLAs. It is used to determine the amount of retired pay the retiree does not have to waive when receiving VA disability compensation.

Although there is no reduction of the multiplier for Disability Retired Pay, when a Disability Retiree elected CSB/REDUX, the calculation to determine hypothetical longevity retired pay is subject to the reduction of the multiplier.
To help clarify the explanation, we will use a set of theoretical numbers for a retiree we’ll call Mike.

Mike’s Gross Disability Retired Pay = $2530
Mike’s VA Disability Compensation = $3946.25
Mike’s Service Time = 20 years, 0 months, 0 days
*Please note: cents are dropped from retired pay.

Step 1
The first step in calculating hypothetical longevity retired pay is to determine the individual member’s multiplier.

The regulations provide the following formula to calculate the hypothetical longevity retired pay multiplier for CSB/REDUX Disability Retirees with less than 30 years of service time: (“Member’s Service Time Decimal” x .035) - .30
To convert Service Time to a decimal, drop the days, then divide the months by 12. Round to two decimal places.

Example: Mike’s Service Time Decimal is 20.00
We put Mike’s Service Time Decimal into the formula: (20.00 X .035) - .30 = .4000
Mike’s Hypothetical Longevity Retired Pay Multiplier is .4000

Step 2
The second step is to multiply the member’s base amount times the hypothetical longevity retired pay multiplier. For members who entered the military after September 7, 1980, the average of their highest 36 months of active duty pay (known as the High 36 or High 3 base amount) is used.
Base Amount X multiplier

Example: Mike’s High 36/High 3 base amount was $4953.53
$4953.53 X .4000 = $1981.00

Step 3
The third step is to increase the pay amount by Cost-of-Living Adjustments (COLAs), if applicable. Keep in mind the COLAs are reduced for CSB/REDUX retirees. Note: The COLA calculations are not illustrated here because this step requires the use of a large table of COLA numbers.

Example: Using the number from Step 2 and adding the applicable COLAs, if Mike had not retired as a Disability Retiree, Mike’s gross retired pay would be $2024. This is called Mike’s “hypothetical longevity retired pay.”

Using Hypothetical Longevity Retired Pay to Calculate the CRDP Exemption to the VA Waiver for CSB/REDUX Disability Retirees

The law limits the amount of Chapter 61 Disability Retired Pay that remains subject to the VA Waiver requirement. Specifically, a Career Disability Retiree receiving Title 10, U.S.C., Chapter 61 Disability Retired Pay must waive Chapter 61 Disability Retired Pay, but only to the extent that the amount of Chapter 61 Disability Retired Pay exceeds the amount of hypothetical longevity retired pay to which the member would have been entitled under any other provision of law if the member had not been retired for disability under Title 10, U.S.C., Chapter 61.

Therefore, the maximum CRDP exemption from the VA Waiver is the amount of hypothetical longevity retired pay. Any amount of gross Disability Retired Pay above that amount must be waived.

To illustrate this in a formula: Gross Disability Retired Pay - Hypothetical Longevity Retired Pay = VA Waiver Amount with the CRDP Exemption

Example:

Mike’s CSB/REDUX Gross Disability Retired Pay is $2530
(This is Mike’s current gross Disability Retired Pay without the VA waiver applied.)

Mike’s Hypothetical Longevity Retired Pay is $2024.00

Mike’s VA Waiver Amount with the CRDP Exemption is $506
(This is the amount that must be waived even with the CRDP exemption.)

Mike’s VA Waiver Amount without the CRDP Exemption is $2530
(This is the amount Mike would have to waive if he was not eligible for the CRDP exemption. It is the amount of Mike’s VA disability compensation that is equal to or less than his gross Disability Retired Pay; the maximum VA Waiver amount cannot exceed gross retired pay.)

In accordance with the legislation, $2024.00 of Mike’s Disability Retired Pay is exempt from the VA Waiver because of his eligibility for CRDP.

Therefore, Mike’s CSB/REDUX Disability Retired Pay AFTER the VA Waiver deduction is $2024.00.

The VA Waiver amount with the CRDP exemption shows on Mike’s Retiree Account Statement (RAS) as the VA Waiver deduction amount. Mike’s CSB/REDUX Disability Retired Pay after the VA Waiver deduction shows on his RAS as his Concurrent Retirement Disability Pay (CRDP) amount.

Please note: CRDP entitlement does not affect the amount a member will receive from the VA.

Retired pay is direct deposited or mailed based on a member’s current retired pay account information.

Recomputation at Age 62

When Mike meets the age requirements (age 62), his Concurrent Retirement and Disability Pay exemption will be recomputed as if he had not taken the CSB/REDUX, with his new pay subject only to the reduced Cost-of-Living Adjustments (COLA).

For additional details, please see the DoD Financial Management Regulations, Volume 7B, Chapter 64, 2.3.4. Special Rules for Qualified Career Disability Retirees at
https://comptroller.defense.gov/Portals/45/documents/fmr/current/07b/07b_64.pdf

CSB/REDUX Survivor Benefit Plan

SBP participants who elected CSB/REDUX reduce their gross retired pay, which is used to compute the premium for SBP coverage. This may cause reduced coverage to their SBP beneficiary, so CSB/REDUX retirees are offered additional SBP coverage based on their unreduced gross retired pay.

This additional coverage would be computed as though the retiree had NOT selected CSB/REDUX and would provide a higher annuity base amount.

Married members who do not choose unreduced coverage for their spouse (or spouse and child) are required to provide spousal concurrence. Election for Natural Interest Person coverage must be at the unreduced level of coverage.

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