VA Retirement System: Pay, Disability & Concurrent Receipt

The VA Retirement System: Military Retirement Pay, VA Disability, and Concurrent Receipt Explained

The VA retirement system is not a single program. It is a network of federal benefits that military retirees, veterans, and their survivors may receive from the Department of Defense (DoD) and the Department of Veterans Affairs (VA). The two largest components are military retired pay, administered by the Defense Finance and Accounting Service (DFAS), and VA disability compensation, administered by the Veterans Benefits Administration. Most retirees cannot receive full military retired pay and full VA disability compensation at the same time unless they qualify for Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC).

Quick Facts

Military Retirement Pay: The Foundation

What Is Military Retired Pay?

Military retired pay is a monthly pension earned after completing a minimum of 20 years of active service or an equivalent period of reserve component service. It is administered by the Defense Finance and Accounting Service (DFAS) and funded by the Department of Defense. Retired pay is taxable at the federal level and in most states.

The Two Active-Duty Retirement Systems

There are two pension plans for active-duty service members. Which one applies depends on when you entered military service.

The BRS became the only retirement system for new service members who entered on or after January 1, 2018. Under BRS, the government automatically contributes 1% of basic pay to your TSP and matches your contributions up to an additional 4%. You also receive a pension based on your highest 36 months of basic pay, though the multiplier is lower than the legacy system.

High-36 Retirement Calculation

For those under the legacy system, retired pay is calculated using this formula:

Retired Pay = Average of Highest 36 Months of Basic Pay × 2.5% × Years of Service

At 20 years of service, this equals 50% of your high-36 average. At 30 years, it reaches 75%. At 40 years, it reaches 100%.

Example: An E-7 with 22 years of service whose high-36 average basic pay was $5,500 per month would receive:

$5,500 × 2.5% × 22 = $3,025 per month in retired pay

BRS Lump Sum Option

Service members under BRS who qualify for retired pay may elect to receive either 25% or 50% of their monthly retired pay as a discounted lump sum at retirement. In exchange, their monthly retired pay is reduced until they reach full Social Security retirement age. You must notify your human resources office no less than 90 days before retirement to choose this option.

Reserve and National Guard Retirement

Reserve component members with 20 or more years of service typically begin receiving retirement benefits at age 60. However, you may qualify for reduced-age retirement (as early as age 50) based on your active-duty service time. Payments do not begin automatically—you must request your retirement benefits from the department where you last served.

VA Disability Compensation: A Separate Benefit

What Is VA Disability Compensation?

VA disability compensation is a tax-free monthly payment for veterans who have disabilities caused or worsened by their military service. It is separate from military retired pay and is administered by the Department of Veterans Affairs. You do not need to be retired from the military to qualify—any veteran with a service-connected condition may apply.

2025 VA Disability Compensation Rates

VA disability ratings are assigned in 10% increments. As of December 1, 2024, the basic monthly rates for a veteran with no dependents are:

Veterans with dependents (spouse, children, or dependent parents) receive higher rates. Additional amounts are available for conditions such as loss of use of limbs, blindness, or severe disability requiring Aid and Attendance.

How to Apply for VA Disability Compensation

Step 1: Gather your military service records, medical records, and any evidence connecting your condition to your service.

Step 2: Complete VA Form 21-526EZ (Application for Disability Compensation and Related Compensation Benefits). You can file online at VA.gov, by mail, by fax, or in person at a VA regional office.

Step 3: Submit your claim. The Fully Developed Claims program allows you to submit all evidence upfront, which can speed processing.

Step 4: Attend any required Compensation and Pension (C&P) examinations.

Step 5: Receive your decision. Average processing time is approximately 90-180 days.

The VA Waiver and Concurrent Receipt

Most military retirees cannot receive full military retired pay and full VA disability compensation at the same time. This is called the “VA waiver.” You must waive an amount of retired pay equal to your VA compensation to receive VA disability payments. For example, if you receive $3,000 in military retired pay and $1,500 in VA disability compensation, you would waive $1,500 of retired pay to receive the $1,500 tax-free VA compensation.

This is where CRDP and CRSC come in—they restore some or all of the waived retired pay for eligible retirees.

Concurrent Retirement and Disability Pay (CRDP)

What Is CRDP?

CRDP is a program that allows military retirees with a VA service-connected disability rating of 50% or greater to receive both full military retired pay and full VA disability compensation without offset. In effect, it restores the retired pay you would otherwise have to waive.

CRDP Eligibility Requirements

You may be eligible for CRDP if you meet all of these conditions:

• You have 20 or more years of creditable military service (active duty or reserve)

• You have a VA service-connected disability rating of 50% or greater

• You are entitled to military retired pay

Most military retirees do not need to apply for CRDP. The VA shares information about VA disability compensation with DFAS, and DFAS automatically processes CRDP payments when you meet the eligibility criteria.

CRDP Payment Calculation

CRDP restores retired pay on a graduated scale based on your disability rating:

For those who had a service disability rating upon retirement (Chapter 61 medical retirees), CRDP is limited to the portion of retired pay based on years of service only, not the disability-based increase.

Combat-Related Special Compensation (CRSC)

What Is CRSC?

CRSC is a tax-free monthly payment from the Department of Defense that replaces some or all of the military retired pay withheld due to receipt of VA disability compensation. Unlike CRDP, CRSC is specifically for disabilities that are combat-related.

CRSC Eligibility

You may be eligible for CRSC if you meet all of these conditions:

• You are retired and entitled to or receiving military retired pay

• You have a VA disability rating of at least 10%

• You currently have your DoD retirement payments reduced by the amount of your VA disability payments

• Your disability is combat-related

“Combat-related” includes disabilities resulting from:

• Armed conflict (combat or during an occupation or raid)

• Hazardous duty (demolition, flying, parachuting)

• War simulation activities (live fire practice, hand-to-hand combat training)

• Exposure to instruments of war (military vehicle, weapon, or chemical agent)

• Activity for which you received a Purple Heart

CRSC Application Process

You must apply for CRSC through your uniformed service. Use DD Form 2860 (Claim for Combat-Related Special Compensation). Send your completed application with supporting documents to your service branch. Do not send original documents—send copies only.

CRSC Retroactive Payments

For many years, DoD limited CRSC retroactive benefits to six years from the date the veteran applied. However, the Supreme Court’s unanimous decision in Soto v. United States (June 2025) lifted that six-year limitation. Eligible retirees may now qualify for compensation retroactive to their initial eligibility date. DoD issued guidance implementing the decision for veterans whose retroactive CRSC benefits had been limited to six years.

CRDP vs. CRSC Comparison

Can you receive both CRDP and CRSC? Yes, it is possible to be eligible for both. However, you must choose one or the other for each payment period. DFAS conducts an annual CRDP/CRSC Open Season (January 1-31) during which eligible retirees can change their election.

VA Pension: For Wartime Veterans with Limited Income

What Is VA Pension?

VA pension is a needs-based monthly benefit for wartime veterans who meet certain age or disability requirements and have limited income and net worth. Unlike VA disability compensation, VA pension is not related to service-connected disabilities. It is for veterans who served during a period of war and now have financial need.

VA Pension Eligibility

You may be eligible for VA pension if:

• You served at least 90 days of active duty with at least one day during a wartime period

• You did not receive a dishonorable discharge

• Your yearly family income and net worth meet certain limits set by Congress

• You are age 65 or older, OR you are permanently and totally disabled, OR you are a patient in a nursing home receiving skilled nursing care, OR you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI)

2025 VA Pension Income Limits

For 2025, the Maximum Annual Pension Rate (MAPR) for a single veteran with no dependents is $16,965. For a veteran with a dependent spouse or children, the limit is $22,226. The net worth limit for 2025 is $159,240 (excluding your primary residence and vehicle).

How to Apply for VA Pension

Use VA Form 21P-527EZ (Application for Veterans Pension). You can apply online, by mail, or in person at a VA regional office. You will need to provide documentation of your wartime service, income, net worth, and medical expenses.

Survivor Benefits: What Happens After a Retiree Dies

Survivor Benefit Plan (SBP)

The Survivor Benefit Plan (SBP) is an annuity program that allows military retirees to continue a portion of their retired pay to their surviving spouse, children, or other designated beneficiaries after death. The annuity is 55% of the elected base amount, and the premium is 6.5% of that same base amount for spouse coverage.

Example: If you elect a base amount of $2,000 per month, your surviving spouse would receive $1,100 per month (55% of $2,000), and your monthly premium would be $130 (6.5% of $2,000).

SBP election must be made prior to retirement. If you are married and elect less than full spouse coverage, your spouse’s notarized concurrence is required. SBP annuities receive annual cost-of-living adjustments (COLA). A 2.5% COLA was applied to SBP annuities effective December 1, 2024.

Reserve Component Survivor Benefit Plan (RCSBP)

Reserve component members must make an RCSBP election when they receive their Notice of Eligibility (20-year letter). You have 90 days from the date of the NOE to elect an option using DD Form 2656-5. If you do not make an election within 90 days, you are automatically enrolled in Option C (immediate annuity).

Dependency and Indemnity Compensation (DIC)

DIC is a tax-free monthly benefit paid to surviving spouses, children, and parents of service members who died in the line of duty or veterans whose death resulted from a service-connected disability. DIC rates receive annual cost-of-living adjustments. The 2025 COLA for DIC and other VA benefits was 2.8%.

How to Apply: Step-by-Step

Applying for Military Retired Pay

1. Complete DD Form 2656 (Data for Payment of Retired Personnel) through your service branch’s retirement processing system.

2. Verify your high-36 basic pay with DFAS.

3. Set up a myPay account at DFAS to manage your retired pay and tax withholding.

4. Receive your first payment on the first business day of the month after your retirement date (typically 30-60 days after retirement).

Applying for VA Disability Compensation

1. Gather evidence (service records, medical records, buddy statements).

2. File VA Form 21-526EZ online at VA.gov, by mail, by fax, or in person.

3. Attend C&P exams if requested.

4. Receive your decision (average 90-180 days).

5. If denied, file an appeal within one year to preserve your effective date.

Applying for CRSC

1. Download DD Form 2860 from your service branch’s website.

2. Gather supporting evidence (service medical records, award citations, Purple Heart documentation, VA decision notice, DD214).

3. Send copies only to your uniformed service—not originals.

4. Keep a copy of your complete application for your records.

Common Mistakes to Avoid

1. Assuming you cannot receive both retired pay and VA disability. Many retirees waive retired pay unnecessarily because they do not know about CRDP or CRSC. If you have a 50%+ rating and 20+ years, check your CRDP eligibility.

2. Missing the CRSC six-year rule. Before Soto v. United States, CRSC retroactive payments were limited to six years. While that limit has been lifted, you still need to apply to receive benefits. Do not delay.

3. Not requesting retirement pay from your reserve component. Reserve and National Guard retirement pay does not begin automatically at age 60. You must apply through your last service branch.

4. Failing to make an SBP election before retirement. If you do not elect SBP coverage before your retirement date, you generally cannot add it later. This is a permanent decision.

5. Not documenting medical issues before separation. Many veterans struggle to service-connect conditions years later because the in-service medical documentation is missing. Get everything documented before you leave.

6. Retiring at the wrong time of year. Retiring on July 1 or in the last month of a fiscal quarter can result in a pay inversion that costs you money. Consult a retirement counselor about optimal retirement dates.

7. Not understanding the VA waiver. If you receive VA disability compensation and military retired pay, DFAS will withhold an amount of retired pay equal to your VA compensation unless you qualify for CRDP or CRSC. Understand how this affects your net pay.

Appeals Process: If You Disagree with a VA Decision

If you disagree with a VA decision on your disability claim, pension, or survivor benefits, you have one year from the date on your decision letter to request a decision review. There are three options:

You can also file a Clinical Appeal to request a review of a decision your VA care team made about your treatment or care. Decision review replaced the old legacy appeals process.

Important: Filing within one year of your decision letter preserves your original effective date. If you file later, your effective date may be the date of the new claim rather than the original filing date.

Common Questions

1. Can I receive military retired pay and VA disability compensation at the same time?

Yes, but only if you qualify for Concurrent Retirement and Disability Pay (CRDP) or Combat-Related Special Compensation (CRSC). CRDP requires a 50% or higher VA rating and 20+ years of service. CRSC requires a combat-related disability and at least a 10% rating. Without either program, you must waive an amount of retired pay equal to your VA compensation.

2. What is the difference between CRDP and CRSC?

CRDP is for any service-connected disability rated 50% or higher and is taxable. CRSC is for combat-related disabilities rated 10% or higher and is tax-free. You can be eligible for both but must choose one for each payment period. CRSC requires an application; CRDP is automatic.

3. How much is military retirement pay after 20 years?

Under the High-36 system, 20 years of service equals 50% of your average highest 36 months of basic pay. For example, if your high-36 average is $5,000 per month, your retired pay would be $2,500 per month. Under BRS, the pension multiplier is lower, but you also receive TSP matching contributions.

4. Do I have to pay taxes on military retired pay?

Yes, military retired pay is taxable at the federal level and in most states. VA disability compensation is tax-free. CRSC is tax-free. CRDP is taxable because it is restored retired pay.

5. What is the Survivor Benefit Plan and is it worth it?

SBP is an annuity that pays your surviving spouse 55% of your elected base amount for life. The premium is 6.5% of the base amount. It is generally considered valuable for retirees with dependents because it provides inflation-adjusted income protection that would be difficult to replicate with commercial insurance.

6. How long does it take to get VA disability compensation?

Average processing time for a VA disability claim is approximately 90-180 days. Fully Developed Claims (where you submit all evidence upfront) may process faster. Appeals can take significantly longer.

7. Can I get VA disability compensation if I did not retire from the military?

Yes. You do not need to be retired from the military to receive VA disability compensation. Any veteran with a service-connected disability may apply, regardless of length of service.

8. What is the VA pension and how is it different from VA disability compensation?

VA pension is a needs-based benefit for wartime veterans with limited income. It is not related to service-connected disabilities. VA disability compensation is for veterans with conditions caused or worsened by military service and is not needs-based.

9. What happens to my retired pay if I get VA disability compensation?

DFAS will withhold an amount of retired pay equal to your VA compensation. This is the VA waiver. If you qualify for CRDP or CRSC, some or all of the withheld amount is restored.

10. How do I apply for CRSC?

Complete DD Form 2860 and send it with supporting documents (copies only) to your uniformed service. You must provide evidence that your disability is combat-related, such as service medical records, award citations, or a Purple Heart. There is no application fee.

11. What is the six-year rule for CRSC and has it changed?

Previously, DoD limited CRSC retroactive payments to six years from the date you applied. The Supreme Court’s 2025 decision in Soto v. United States lifted that limitation. DoD has issued guidance to implement the decision for veterans whose retroactive benefits were limited to six years.

12. Can my spouse receive my military retirement pay after I die?

Only if you elected Survivor Benefit Plan (SBP) coverage before retirement. SBP pays your surviving spouse 55% of your elected base amount for life, as long as they do not remarry before age 55. If you did not elect SBP, your retired pay stops at your death.

Key Takeaways

• The VA retirement system includes two separate benefit streams: military retired pay (from DoD/DFAS) and VA disability compensation (from VA).

• Most retirees must waive an amount of retired pay equal to their VA compensation unless they qualify for CRDP or CRSC.

• CRDP restores retired pay for retirees with a 50%+ VA rating and 20+ years of service. It is automatic.

• CRSC provides tax-free restoration for combat-related disabilities rated 10% or higher. It requires an application (DD Form 2860).

• The 2025 Supreme Court decision Soto v. United States lifted the six-year limit on retroactive CRSC payments.

• VA pension is a separate needs-based benefit for wartime veterans with limited income—it is not the same as VA disability compensation.

• Survivor Benefit Plan (SBP) provides a lifetime annuity to surviving spouses (55% of elected base amount) for a 6.5% premium.

• VA disability compensation rates range from $175.51 per month (10%) to $3,831.30 per month (100%) for a veteran with no dependents.

• If you disagree with a VA decision, you have one year to file a Supplemental Claim, Higher-Level Review, or Board Appeal.

• Reserve and National Guard retirement pay begins at age 60 and does not start automatically—you must apply.

Official Resources

• U.S. Department of Veterans Affairs — va.gov

• VA Disability Compensation — va.gov/disability

• VA Pension — va.gov/pension

• VA Survivor Benefits — va.gov/family-member-benefits

• Defense Finance and Accounting Service (DFAS) — dfas.mil

• Military OneSource — militaryonesource.mil

• DoD Military Pay — militarypay.defense.gov

• Blended Retirement System Information — militarypay.defense.gov/BlendedRetirement

• Social Security Administration — ssa.gov

• USA.gov Military Retirement — usa.gov/military-pensions

• U.S. Office of Personnel Management (OPM) — opm.gov

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