Under existing regulations private soldiers and corporals, as well as their equivalents in the Air Corps and the Naval Service, can remain in service for up to 21 years.
But PDforra - the staff representative association for soldiers, aircrew and sailors - said the 21-year cut-off “makes no practical sense” and leads to wastage of personnel.
“Many of these people will be at their very peak in terms of output - and large numbers will be technically qualified after years of training and very specific skills development.
“Our most critical work is peace keeping, where experience and training are key issues across a range of specialities,” deputy general secretary of PDforra Simon Devereux said.
The association called on Minister for Defence Alan Shatter to set retirement at 31 years of service.
Mr Devereux said individuals who wish to extend their service make a positive contribution to the State and should not be denied the opportunity to do so because of “arbitrary rules”.