The Senate Armed Services Committee has criticized the Pentagon for allowing dismissed Gen. Michael J. Dugan to remain on active duty until he can retire with a pension increase of $17,000.

Although the panel and the Senate during the weekend approved President Bush's nomination of Dugan to retire as a full general, the committee said it had serious questions about the process.

Defense Secretary Richard B. Cheney fired Dugan as Air Force chief of staff on Sept. 17 after Dugan's public comments about contingency plans to unleash massive air raids on Iraq and target President Saddam Hussein personally.

Under current law, Dugan would have been demoted to major general 90 days after his firing and would have been retired on Dec. 17 with benefits based on the lower rank. However, Bush nominated him to retire as full general on Jan. 1.

Major general, two stars, is two ranks lower than general, four stars.

"The primary reason for allowing General Dugan to retire on Jan. 1, 1991, is to permit him to take advantage of the increase in the basic pay for the grade of general upon which his retired pay would be calculated," the committee said Monday.

The committee noted that a full general's basic annual pay goes from $78,199 to $97,814 on Jan. 1. Earlier, when Dugan's dismissal was announced, Pentagon officials estimated his pension at $60,000 in the four-star rank, if he retired then.

Dugan remains at the Pentagon as an assistant to Air Force Secretary Donald B. Rice. He is currently overseeing studies on the future needs for pilots and navigators as well as the officer evaluation system.