
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 107-107 Section 1048(c)(8)]
[CITE: 10USC1407]

 
                         TITLE 10--ARMED FORCES
 
                    Subtitle A--General Military Law
 
                           PART II--PERSONNEL
 
                 CHAPTER 71--COMPUTATION OF RETIRED PAY
 
Sec. 1407. Retired pay base for members who first became members 
        after September 7, 1980: high-36 month average
        
    (a) Use of Retired Pay Base in Computing Retired Pay.--The retired 
pay or retainer pay of any person entitled to that pay who first became 
a member of a uniformed service after September 7, 1980, is computed 
using the retired pay base or retainer pay base determined under this 
section.
    (b) High-Three Average.--Except as provided in subsection (f), the 
retired pay base or retainer pay base of a person under this section is 
the person's high-three average determined under subsection (c) or (d).
    (c) Computation of High-Three Average for Members Entitled to 
Retired or Retainer Pay for Regular Service.--
        (1) General rule.--The high-three average of a member entitled 
    to retired or retainer pay under any provision of law other than 
    section 1204 or 1205 or section 12731 of this title is the amount 
    equal to--
            (A) the total amount of monthly basic pay to which the 
        member was entitled for the 36 months (whether or not 
        consecutive) out of all the months of active service of the 
        member for which the monthly basic pay to which the member was 
        entitled was the highest, divided by
            (B) 36.

        (2) Special rule for short-term disability retirees.--In the 
    case of a member who is entitled to retired pay under section 1201 
    or 1202 of this title and who has completed less than 36 months of 
    active service, the member's high-three average (notwithstanding 
    paragraph (1)) is the amount equal to--
            (A) the total amount of basic pay to which the member was 
        entitled during the period of the member's active service, 
        divided by
            (B) the number of months (including any fraction thereof) of 
        the member's active service.

    (d) Computation of High-Three Average for Members and Former Members 
Entitled to Retired Pay for Nonregular Service.--
        (1) Retired pay under chapter 1223.--The high-three average of a 
    member or former member entitled to retired pay under section 12731 
    of this title is the amount equal to--
            (A) the total amount of monthly basic pay to which the 
        member or former member was entitled during the member or former 
        member's high-36 months (or to which the member or former member 
        would have been entitled if the member or former member had 
        served on active duty during the entire period of the member or 
        former member's high-36 months), divided by
            (B) 36.

        (2) Nonregular service disability retired pay.--The high-three 
    average of a member entitled to retired pay under section 1204 or 
    1205 of this title is the amount equal to--
            (A) the total amount of monthly 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's 
        high-36 months), divided by
            (B) 36.

        (3) Special rule for short-term disability retirees.--In the 
    case of a member who is entitled to retired pay under section 1204 
    or 1205 of this title and who was a member for less than 36 months 
    before being retired under that section, the member's high-three 
    average (notwithstanding paragraph (2)) is the amount equal to--
            (A) the total amount of basic pay to which the member was 
        entitled during the entire period the member was a member of a 
        uniformed service before being so retired (or to which the 
        member would have been entitled if the member had served on 
        active duty during the entire period the member was a member of 
        a uniformed service before being so retired), divided by
            (B) the number of months (including any fraction thereof) 
        which the member was a member before being so retired.

        (4) High-36 months.--The high-36 months of a member or former 
    member whose retired pay is covered by paragraph (1) or (2) are the 
    36 months (whether or not consecutive) out of all the months before 
    the member or former member became entitled to retired pay for which 
    the monthly basic pay to which the member or former member was 
    entitled (or would have been entitled if serving on active duty 
    during those months) was the highest. In the case of a former 
    member, only months during which the former member was a member of a 
    uniformed service may be used for purposes of the preceding 
    sentence.

    (e) Limitation for Enlisted Members Retiring With Less Than 30 
Years' Service.--In the case of a member who is retired under section 
3914 or 8914 of this title or who is transferred to the Fleet Reserve or 
Fleet Marine Corps Reserve under section 6330 of this title, the 
member's high-36 average shall be computed using only rates of basic pay 
applicable to months of active duty of the member as an enlisted member.
    (f) Exception for Enlisted Members Reduced in Grade and Officers Who 
Do Not Serve Satisfactorily in Highest Grade Held.--
        (1) Computation based on pre-high-three rules.--In the case of a 
    member or former member described in paragraph (2), the retired pay 
    base or retainer pay base is determined under section 1406 of this 
    title in the same manner as if the member or former member first 
    became a member of a uniformed service before September 8, 1980.
        (2) Affected members.--A member or former member referred to in 
    paragraph (1) is a member or former member who by reason of conduct 
    occurring after the date of the enactment of this subsection--
            (A) in the case of a member retired in an enlisted grade or 
        transferred to the Fleet Reserve or Fleet Marine Corps Reserve, 
        was at any time reduced in grade as the result of a court-
        martial sentence, nonjudicial punishment, or an administrative 
        action, unless the member was subsequently promoted to a higher 
        enlisted grade or appointed to a commissioned or warrant grade; 
        and
            (B) in the case of an officer, is retired in a grade lower 
        than the highest grade in which served by reason of denial of a 
        determination or certification under section 1370 of this title 
        that the officer served on active duty satisfactorily in that 
        grade.

        (3) Special rule for enlisted members.--In the case of a member 
    who retires within three years after having been reduced in grade as 
    described in paragraph (2)(A), who retires in an enlisted grade that 
    is lower than the grade from which reduced, and who would be subject 
    to paragraph (1) but for a subsequent promotion to a higher enlisted 
    grade or a subsequent appointment to a warrant or commissioned 
    grade, the rates of basic pay used in the computation of the 
    member's high-36 average for the period of the member's service in a 
    grade higher than the grade in which retired shall be the rates of 
    pay that would apply if the member had been serving for that period 
    in the grade in which retired.

(Added Pub. L. 99-348, title I, Sec. 104(b), July 1, 1986, 100 Stat. 
689; amended Pub. L. 101-189, div. A, title VI, Sec. 651(a), (b)(2), 
Nov. 29, 1989, 103 Stat. 1459, 1460; Pub. L. 103-337, div. A, title XVI, 
Sec. 1662(j)(5), Oct. 5, 1994, 108 Stat. 3004; Pub. L. 104-106, div. A, 
title XV, Sec. 1501(c)(15), Feb. 10, 1996, 110 Stat. 499; Pub. L. 106-
398, Sec. 1 [[div. A], title VI, Sec. 651], Oct. 30, 2000, 114 Stat. 
1654, 1654A-163.)

                       References in Text

    The date of the enactment of this subsection, referred to in subsec. 
(f)(2), is the date of enactment of Pub. L. 106-398, which was approved 
Oct. 30, 2000.


                            Prior Provisions

    A prior section 1407, added Pub. L. 96-342, title VIII, 
Sec. 813(a)(1), Sept. 8, 1980, 94 Stat. 1100; amended Pub. L. 96-513, 
title I, Sec. 113(c), title V, Secs. 501(21), 511(53), Dec. 12, 1980, 94 
Stat. 2877, 2908, 2925, related to determination of retired base pay, 
prior to repeal by Pub. L. 99-348, Sec. 104(b).


                               Amendments

    2000--Subsec. (b). Pub. L. 106-398, Sec. 1 [[div. A], title VI, 
Sec. 651(1)], substituted ``Except as provided in subsection (f), the 
retired pay base'' for ``The retired pay base''.
    Subsec. (f). Pub. L. 106-398, Sec. 1 [[div. A], title VI, 
Sec. 651(2)], added subsec. (f).
    1996--Subsec. (c)(1). Pub. L. 104-106, Sec. 1501(c)(15)(A), 
substituted ``section 12731'' for ``section 1331''.
    Subsec. (d)(1). Pub. L. 104-106 substituted in heading ``chapter 
1223'' for ``chapter 67'' and in text ``section 12731'' for ``section 
1331''.
    1994--Subsec. (c)(2)(B). Pub. L. 103-337, Sec. 1662(j)(5)(A), which 
directed substitution of ``chapter 1223'' for ``chapter 67'', could not 
be executed because the words ``chapter 67'' did not appear subsequent 
to amendment by Pub. L. 101-189, Sec. 651(a)(2), (4). See 1989 Amendment 
note below.
    Subsec. (f)(2). Pub. L. 103-337, Sec. 1662(j)(5)(B), which directed 
amendment of subsec. (f)(2) by substituting ``Chapter 1223'' for 
``Chapter 67'' in heading and ``section 12731'' for ``section 1331'' in 
text, could not be executed because of previous repeal of subsec. (f) by 
Pub. L. 101-189, Sec. 651(a)(2). See 1989 Amendment note below.
    1989--Subsec. (b). Pub. L. 101-189, Sec. 651(a)(1), (b)(2), 
substituted ``person'' for ``member'', ``person's'' for ``member's'', 
and ``subsection (c) or (d)'' for ``subsection (c)''.
    Subsec. (c). Pub. L. 101-189, Sec. 651(a)(2), (4), added subsec. (c) 
and struck out former subsec. (c) which related to computation of high-
three average.
    Subsec. (d). Pub. L. 101-189, Sec. 651(a)(4), added subsec. (d). 
Former subsec. (d) redesignated (e).
    Subsec. (e). Pub. L. 101-189, Sec. 651(a)(2), (3), redesignated 
subsec. (d) as (e) and struck out former subsec. (e) which related to 
special rules for short-term disability retirees.
    Subsecs. (f), (g). Pub. L. 101-189, Sec. 651(a)(2), struck out 
subsec. (f) which related to special rule for members retiring with non-
regular service, and subsec. (g) which defined the term ``years of 
creditable service''.


                    Effective Date of 1996 Amendment

    Section 1501(c) of Pub. L. 104-106 provided that the amendment made 
by that section is effective as of Dec. 1, 1994, and as if included as 
an amendment made by the Reserve Officer Personnel Management Act, title 
XVI of Pub. L. 103-337, as originally enacted.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-337 effective Dec. 1, 1994, except as 
otherwise provided, see section 1691 of Pub. L. 103-337, set out as an 
Effective Date note under section 10001 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 1401, 1401a, 1402a, 3991, 
3992, 6151, 6333, 6334, 8991, 8992, 12739 of this title; title 14 
sections 357, 423, 424; title 33 section 853o; title 42 sections 211, 
212.
