Purpose:

To provide a lump-sum payment to eligible active and reserve Service members who have completed at least six, but fewer than twenty, years of active service immediately before being involuntarily discharged or denied continuation of service for which they volunteered, short of retirement eligibility.

General Information:

1. The complete policy governing Involuntary Separation Pay (ISP) can be found in Department of Defense Instruction 1332.29.  The statutory basis for this program can be found in Title 10 United States Code §1174.
2. To qualify for ISP, a Service member must have received an involuntary separation that is characterized as either “honorable” or “general (under honorable conditions)” and is required to agree to serve in the Ready Reserve (Selected Reserve or Individual Ready Reserve) of a Reserve Component for a period of not less than 3 years following the Service member’s discharge or release from active duty or active service (AD/AS).  This obligation is in addition to any other service obligation of the Service member.
3. A Service member who receives ISP and later qualifies for retired pay, retainer pay, or disability compensation (from the Department of Veterans Affairs) will have their retired pay, retainer pay, or disability compensation reduced until the total amount deducted is equal to the total amount of ISP received.  Waivers are not authorized for this repayment requirement.
4. A Service member who receives a sole survivorship discharge (voluntary or involuntary) is eligible for full ISP and is relieved of the requirements to complete their initial service obligation, accrue more than 6 years of active service, and serve in the Ready Reserve.

Calculation of ISP: 

Full ISP is 10 percent of the product of the number of years of active service and 12 times the monthly basic pay to which the Service member was entitled at the time of discharge or release from AD/AS.  Half ISP is 50% of the calculated amount of full separation pay. 

Full ISP Eligibility: 

Full payment of non-disability ISP is authorized to Service members of the Active and Reserve Components who meet each of following five conditions:

1. The Service member has completed at least 6 years, but fewer than 20 years, of AD/AS.  For Reserve Service members, 6 years of continuous AD/AS must have preceded immediately before separation. 
2. The Service member’s separation is characterized as “honorable” and none of the conditions listed below under “Limitations on ISP Eligibility” apply.
3. The Service member is being involuntarily separated by the Military Service concerned through either the denial of reenlistment or the denial of continuation on active duty or in an active service status.  See DoDI 1332.29 for more information and specific examples.
4. The Service member has entered into a written agreement with the Military Service concerned to serve in the Ready Reserve of a Reserve Component of the Military Services for a period of not less than 3 years following the separation from AD/AS.
5. The Service member has acknowledged, in writing, the repayment requirements of ISP as described in DoDI 1332.29.

Half ISP Eligibility: 

Half payment of non-disability ISP is authorized to Service members of the Active and Reserve Components who meet each of following five conditions:

1. The Service member has completed at least 6 years, but fewer than 20 years, of AD/AS.  For Reserve Service members, 6 years of continuous AD/AS must have preceded immediately before separation.
2. The Service member’s separation is characterized as “honorable” or “general (under honorable conditions)”and none of the conditions listed below under “Limitations on ISP Eligibility” apply.
3.  The Service member is being involuntarily separated by the Military Service concerned through either a Service-specific program established as a half-payment level by the Secretary of the Military Department concerned or through the denial of reenlistment or continuation on AD/AS due to being deemed not fully qualified for retention or continuation.  Some examples of conditions considered “not fully qualified” are, but are not limited to: weight control failures, family care plan deficiencies, security clearance issues, mental/physical conditions that do not constitute a disability, and alcohol or drug abuse rehabilitation failure.  More information can be found in DoDI 1332.29.
4. The Service member has entered into a written agreement with the Military Service concerned to serve in the Ready Reserve of a Reserve Component of the Military Services for a period of not less than 3 years following the separation from AD/AS.
5. The Service member has acknowledged, in writing, the repayment requirements of ISP as described in DoDI 1332.29.

Limitations on ISP Eligibility: 

Service members who separated under the following circumstances are not eligible for ISP:

1. separate at their own request;
2. decline Reserve Service upon separation;
3. have not yet completed their Initial Term of Enlistment or Initial Period of Obligated Service upon separation;
4. are released for training;
5. are eligible for retired or retainer pay;
6. are separated for performance, misconduct, or other disciplinary reasons;
7. is a warrant officer whose appointment is terminated and who then elects to enlist; or
8. through a Service-specific program established at a no payment level by the Secretary of the Military Department concerned.

More information on the specific limitations on ISP eligibility can be found in DoDI 1332.29.