How is it justified to deduct VA Comp from DFAS retirement pay?

The primary reason that you have to give up retirement pay to receive the disability compensation is because Congress didn't want to come up with enough money to fully pay you for both. That's a cynical viewpoint, but it was the reality behind finally getting this up and running. In 2004, Congress finally agreed that concurrent receipt of retirement pay (for past service) and disability (for loss of future earnings) was the right thing to do, and they passed it into law. As they were writing the legislation, they ran the numbers to fully fund concurrent receipt, but the projected amount was too big. So, Congress drew the line at 50% as a means to keep the overall cost down. Anyone below 50% was hosed, and anyone 50% or above benefited by receiving both. Also, to help keep the cost down, they phased it in over 10 years.

Here are a couple of links to more information on the program:

https://crsreports.congress.gov/product/pdf/IF/IF10594/

If you are rated less than 50% disability, they will deduct from Retirement, happened to me, that is the rules. 50% or higher, you get to keep them both. No one likes it, but that is the VA rules, unless it get changes, which I do not see it happening.

By law....unfortunately