DOD recommends “radical” overhaul of military retirement

From the Army Times:

A sweeping new plan to overhaul the Pentagon’s retirement system would give some benefits to all troops and phase out the 20-year cliff vesting system that has defined military careers for generations.

In a massive change that could affect today’s troops, the plan calls for a corporate-style benefits program that would contribute money to troops’ retirement savings account rather than the promise of a future monthly pension, according to a new proposal from an influential Pentagon advisory board.

All troops would receive the yearly retirement contributions, regardless of whether they stay for 20 years.

What most fascinates me is the continued use of the word “fairness.” It’s not fair that people who separate from the military after only a few years leave without any retirement benefits. Yes, it is. And has been. Soldiers know up front that the only way to receive retirement benefits is to serve 20 years. How is that not fair?

More:

“The current system is unfair, unaffordable and inflexible,” said Richard Spencer, a former finance executive and Marine Corps pilot who led the board’s eight-month retirement study.

This alternative plan would “enhance the ability of the service member to build a meaningful retirement asset [with] complete flexibility for their lifestyle or desires,” Spencer said.

There’s that word again. One of the President’s favorites.

And what of the Soldiers, Sailors and Marines currently in the service? Let me redefine the use of unfair: rather than grandfather those currently in service, the plan calls for immediate adoption of the new program, which would require Congressional approval. How would this effect military members? Let me count the ways:

• Recruits. The newest troops out of boot camp after the proposed change would have no direct incentive to stay for 20 years and would not get a fixed-benefit pension. Instead, they would receive annual contributions to a Thrift Savings Plan account and could leave service with that money at any time — although under current rules, they can’t withdraw the money until age 59½ without paying a penalty, except in certain specified circumstances.

• Five years of service. Troops would immediately begin accruing new benefits in a TSP account. If they remained in service until the “old vesting date” — the 20-year mark — they also would get one-fourth of the “old plan benefit,” or about 12 percent of their pay at retirement, as an annuity. If they separated, for example, after 10 years, they would walk away with no fixed-pension benefit but would have a TSP account with five years of contributions.

• 10 years of service. Troops would immediately begin accruing new benefits in a TSP account. If they remained in service for 10 more years, they would receive half of the “old plan benefit,” about 25 percent of their pay at retirement, as an annuity. If they separated after 15 years, they would walk away with no fixed-pension benefit but would have a TSP account with five years of contributions.

• 15 years of service. Troops would immediately begin accruing new benefits in a TSP account. If they remained in service for five more years, they would receive three-fourths of the “old plan benefit,” about 37.5 percent of their pay at retirement, as an annuity.

• 20 years and beyond. Troops who stayed in past 20 years would continue to receive annual TSP contributions.

For professional soldiers like my husband, this is a big slap. I reminded pjHusband last night that we all had to make sacrifices at this point because they government can’t pay its contracts. Even those with the military. That said, if we take a big bite out of our retirement, I want to know where equal cuts are made.  $254 billion on the backs of those in military service? Show me the big cuts in entitlement programs. Show me the money, eh? Surely not the Social Security recipients or folks within 5 years of receiving benefits. Why is it now that Social Security can’t be reformed–because people have paid into it? What about the folks who’ve given up years with their families at home in war zones, eh? Different sacrifice, I’m sure.

Related: The military can take significant cuts but entitlements can’t?

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22 Responses

  1. I HATE the idea and will help fight it. But,

    “There’s that word again. One of the President’s favorites.”

    Really? This is the President’s fault? A recommendation from a DoD Board?

    This is NOT a Repub vs Dem issue. Don’t try and make it one. ALL of us need to challenge this proposal.

    • Mike, you’re correct in that this isn’t a presidential proposal. My aside was meant to jab the liberalism that’s infected the notion of “fair.” Make no mistake, Democrats will protect entitlements before they do a damn thing to help the military.

      • I’m sorry, but that is a jaded and inaccurate view. Watch more Fox.

      • Funny that. I don’t watch TV save Netflix streaming. I find fox irritating, regardless.
        As for the overall idea of “fair,” I am not inaccurate. That’s why young kids CA no longer learn how to lose: It’s not fair to the children. That’s why kids earn a diploma worth less than toilet paper: It’s not fair to hold anyone back, so we’ll just make it worthless for all. That’s why illegals should receive amnesty: It’s not fair they weren’t born here. That’s why felons should vote: It’s not fair they lost the right. It’s not fair to attach strings like *working* for welfare recipients: they have hard enough lives as it is. And liberals don’t distort the meaning of fair?

  2. [...] DOD recommends “radical” overhaul of military retirement [...]

  3. [...] DOD recommends “radical” overhaul of military retirement [...]

  4. [...] the military faces to retirement, ostensibly in the wake of the budget crisis here, here, here and here. The plan, however, saves pennies compared to the true budget woes we suffer as it offers [...]

  5. [...] DOD recommends “radical” overhaul of miliary retirement [...]

  6. It just amazes me how people can try and institute corporate mentality into our organization. I wish they did when I never received overtime, when I was chipping ice out of my canteen to drink, or digging in the bottom of my ruck looking for a maybe a spare peanut butter because our resupply was held off due to weather. Now I am not complaining I served and am serving due to the people around me and the honor of serving the greatest nation in the world. Retirement was never in the back of my mind until I got over the 10yr mark and I started looking at the military as my profession. If they would have let me know 5 to 10 years out of course I would have looked at either getting out or putting money into a TSP, but I trusted the system as it has trusted me. When you throw out the word “unfair” walk a week in our shoes, do a year long deployment in a combat zone, working 18-24hrs a day, missing meals, dodging IED’s and than getting a couple weeks off that year if youy are lucky, than tell me about “fair”. If this passes I will grin an bear it that is what I signed up to do.

    • First, thank you for your service, Lunk. Second, you’re absolutely right: the military isn’t a corporation comprised of average civilians. They can’t hold a candle to what you and your compatriots do on a daily basis. I am saddened and incredibly angry over this, but I don’t expect it to go down without a fight. See today’s post for more.

  7. The military is a uniquely separate component of American society that is authorized by the Constitution and common sense. It is not a civilian workforce and carries a much bigger burden in the DOD than its civilian counterparts. Now I’m gonna slam the DOD civilian side as I just finished a year in Afghanistan where the average contractor was being paid double or triple what we are paid (and there were lots!) only to return to my current job which is 75% civilian. I keep being denigrated by these GS/contractor folks who according to a federal ranking scale technically outrank me (E7/16 years active)…..however in my dealings with them which I have done everyday for the last 2 years all I see are what would be considered equivalent to an E-4 mentality with them both responsibility and performance-wise. They don’t move unless they want to, deploy for long periods of time unless there is big money in it, are free to quit or look for employment elsewhere anytime, are able to go home EVERY NIGHT to their family, can focus solely on one job or task while having little professional requirements/standards other than their job description, have high tolerance for incompetence and aren’t required to DIE as part of their deal. All this while being slowly sidled up more and more to the military in all the “nice” spots so they can be jealous of a 20-year retirement pension which is subject to individual service stipulations and possible recall to duty. Not Fair??? The service takes a toll on its members that it seems some people just aren’t understanding so I say to all civilians who see fit to examine the military from their cubicle: GET YOUR A*& TO THE FRONT, DO IT FOR 20 YEARS AND THEN TELL ME YOUR OPINION OR PROPOSED PLAN

  8. [...] DOD recommends “radical” overhaul of military retirement [...]

  9. I’ve been waiting to here about changes to military retirement ever since Obama took office. Good catch, PJ, albeit bad news. They claim it’s better this way, but I noticed the Army Times article says they are unsure whether the new plan’s payout would wait until retirement age like IRAs.

    Uh, huh. Yeah, it’s about helping the military. Color me skeptical.

    Nice catch, PJ. I forwarded this post to Insta, on the off hand chance he catches it, too.

    • HEAR, not here. Daggum I should proof read my comments.

    • Yea, I wondered what your take would be on this. I underestimated how much it bothers my husband, so I only imagine your hubby’s reaction is on par. (And wow, thanks for sending to Insta!)

      • Yep, my hubs was on par with yours. One of the reasons he never signed up for TSP is his long-held belief that one day, the military will ditch the pension entirely and use TSP as the only retirement program.

        Wonder if he is right.

        And pish, Glenn didn’t bite. You’re welcome for sending it his way, but I prolly should not have even mentioned it. I send him stuff regular, but it rarely gets picked up.

        You have a good weekend, PJ.

      • pjHusband never opened a TSP, either. We have our own Roths that we fund every year. Your husband is probably right: that’s what happened with DOD/DPW civillian employees, the conversion between a retirement annuity based on years in service to the TSP. That was probably a decade ago. So thankful for the weekend. My FRG “volunteer” hours have exceeded sanity level in the past few months, and this week was exceptional among the crazy. I’m tired! Enjoy your weeken, too! Go find some good BBQ!

  10. This makes my blood boil. The people who literally risk their lives and spend days, months, and years away from their families, all for their country, are asked to cut back but God forbid we ask that the entire country pay taxes (that whole 49% that doesn’t…) or that the government downsize in other departments first.

    What is wrong with this administration, and frankly, a lot of people?

    • You hit the nail on the head. What cut backs are these politicians making on theirselves and their benefit programs?

      • Thanks, Ralph. The political posturing angers me beyond belief, especially the idea of proportionate cuts from defense vice entitlements when the latter accounts for the lions share of budgetary woes.

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