What is the High-3 pension?
The High-3 pension (also called the Final Pay or High-36 system) is the traditional military retirement plan that applies to service members who entered the armed forces before January 1, 2018. It is a defined benefit pension — a guaranteed monthly payment for life starting the day after retirement, regardless of investment performance.
'High-3' refers to the calculation base: the average of the highest 36 consecutive months of basic pay (not total compensation). For most career military, this is the final 3 years of service.
High-3 pension formula
Monthly pension = Years of Active Service × 2.5% × High-3 Average Basic Pay
Examples: - 20 years: 20 × 2.5% = 50% of High-3 pay - 25 years: 25 × 2.5% = 62.5% of High-3 pay - 30 years: 30 × 2.5% = 75% of High-3 pay (maximum for most branches) - 40 years: 40 × 2.5% = 100% (theoretical maximum)
The 20-year mark is a major threshold — it's the minimum service requirement for a pension. One day short of 20 years means no pension under High-3 (unlike BRS, which preserves your TSP balance).
What counts as 'High-3 pay'?
High-3 pay is the average of your Basic Pay (the base salary component of military compensation) over the highest 36 consecutive months. It does not include: - Basic Allowance for Housing (BAH) - Basic Allowance for Subsistence (BAS) - Special pays (flight pay, hazardous duty pay, etc.) - Combat zone tax exclusions
This matters because basic pay is only one component of total military compensation — typically 50–60% of a service member's total pay package.
COLA adjustments on High-3
High-3 pensions receive annual Cost-of-Living Adjustments (COLA) tied to the Consumer Price Index (CPI-W). Under the High-3 system, retirees receive 100% of the CPI increase each year, preserving purchasing power.
This differs from the BRS and REDUX systems. REDUX (an older optional plan) reduced COLA to CPI minus 1% per year, which significantly eroded purchasing power over a long retirement — REDUX is no longer offered.
High-3 COLA is one of the most valuable features of the military retirement system. A $3,000/month pension at age 40, growing at 3% annual COLA for 40 years, reaches over $9,000/month by age 80.
Survivor Benefit Plan (SBP)
High-3 retirees can elect the Survivor Benefit Plan (SBP) at retirement, which continues pension payments to an eligible survivor (spouse or children) after the retiree's death. SBP provides 55% of the base retirement pension to the surviving spouse.
SBP costs 6.5% of the base retirement amount. It is subsidized by the government and is often the best life insurance value available to retirees — unlike commercial life insurance, SBP payments continue for the survivor's lifetime and include COLA adjustments.
The election is made at retirement and is generally irrevocable (with limited exceptions).
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Frequently Asked Questions
What is the High-3 military pension at 20 years?
At exactly 20 years of service under High-3, you receive 50% of your average highest-36-months basic pay for life. For an E-7 with 20 years at approximately $5,400/month basic pay, that's about $2,700/month starting immediately on the day after retirement.
Does the High-3 pension include BAH and BAS?
No. The High-3 calculation is based only on Basic Pay — not housing allowance (BAH), subsistence allowance (BAS), or special pays. These allowances do not count toward your pension base.
Can I lose my High-3 pension?
Under certain circumstances — court martial convictions for specific offenses can result in forfeiture of retirement pay. A dishonorable discharge forfeits all military retirement benefits. Retired pay may also be reduced if ordered by a court for a divorce settlement through the Uniformed Services Former Spouses' Protection Act (USFSPA).
Who is still eligible for High-3?
Service members who entered active duty or the reserve components before January 1, 2018 fall under the High-3 system (unless they voluntarily elected BRS during the 2018 opt-in window). All members who entered service on or after January 1, 2018 are automatically enrolled in BRS.