Pentagon Proposes Military Pension Overhaul

The report is meant to provide options for an ongoing compensation and retirement commission.

SLUG: ph-shooting DATE: March 05, 2010 NEG NUMBER: 212525 LOCATION: Pentagon City Metro Stop PHOTOGRAPHER: GERALD MARTINEAU, for TWP CAPTION: We photograph people who decided to walk to the Pentagon, including many in uniform, rather than take a shuttle bus. Photo shows them crossing Army-Navy Drive.
Washington Post/Getty Images
Jordain Carney
March 7, 2014, 10:52 a.m.

Des­pite be­ing con­sidered a third rail by many mem­bers of Con­gress, the Pentagon is rolling out pro­pos­als to over­haul its mil­it­ary re­tire­ment sys­tem — in­clud­ing of­fer­ing cash earli­er but lower­ing the life­time value for many ser­vice mem­bers, ac­cord­ing to a 44-page doc­u­ment ob­tained by Mil­it­ary Times.

Some key takeaways from the re­port:

  • The re­port lays out two con­cepts for po­ten­tial re­forms, but they would both mean a lower life­time mon­et­ary value for many fu­ture ser­vice mem­bers, com­pared with the cur­rent sys­tem.
  • Un­der one pro­pos­al, act­ive and re­serve mem­bers would get “par­tial be­ne­fits” once they re­tire from the mil­it­ary un­til they reach their early 60s. Pentagon of­fi­cials have re­peatedly poin­ted out that many mil­it­ary re­tir­ees go on to have second ca­reers be­fore leav­ing the work­force.
  • Un­der the second pro­pos­al, act­ive forces would get full be­ne­fits after they re­tire from the mil­it­ary — but the mon­et­ary value would be smal­ler than what ser­vice mem­bers get today. And re­serve mem­bers would have be­ne­fits kick in at age 60.
  • Both pro­pos­als re­quire ser­vice mem­bers to serve 20 years be­fore they are fully ves­ted in the re­tire­ment plans.
  • In both con­cepts out­lined, the Pentagon would con­trib­ute a cer­tain per­cent­age of an­nu­al base pay after two years of ser­vice to a 401(k)-like plan. Ser­vice mem­bers would be­come ves­ted if they con­tin­ue serving after six years.
  • Both pro­pos­als would of­fer a bo­nus around the 12-year mark to try to boost re­ten­tion in mid-ca­reer ser­vice mem­bers. De­fense De­part­ment of­fi­cials and mem­bers of Con­gress worry that chan­ging the cur­rent mil­it­ary sys­tem will hurt the mil­it­ary’s chances of keep­ing top tal­ent.
  • The pro­pos­als grand­fath­er in cur­rent mil­it­ary mem­bers and re­tir­ees.

The re­port stresses that the pro­pos­als are only meant to be food for thought for a com­mis­sion look­ing at com­pens­a­tion and re­tire­ment changes. Rear Adm. John Kirby, the Pentagon press sec­ret­ary, said the com­mis­sion asked for the De­fense De­part­ment to provide op­tions, and the Pentagon doesn’t side with one over the oth­er.

The Mil­it­ary Com­pens­a­tion and Re­tire­ment Mod­ern­iz­a­tion Com­mis­sion’s re­port isn’t ex­pec­ted un­til Feb­ru­ary 2015, and top Pentagon of­fi­cials in­clud­ing act­ing Deputy De­fense Sec­ret­ary Christine Fox have pledged to hold off on form­ally re­com­mend­ing any changes un­til after the com­mis­sion’s work is com­plete.

The re­port is a com­plex bal­an­cing act of try­ing to re­form a sys­tem without af­fect­ing the mil­it­ary’s abil­ity to re­tain top tal­ent and re­cog­niz­ing, as De­fense of­fi­cials have said, that something has got to give.

But per­son­nel costs have long been con­sidered sac­red ground for Con­gress, and law­makers are quickly over­turn­ing most of a $6 bil­lion cut to work­ing-age mil­it­ary re­tir­ee pen­sions in­cluded in Decem­ber’s budget agree­ment. The Pentagon is already fa­cing an up­hill battle on a hand­ful of changes it is hop­ing to make as part of its fisc­al 2015 budget re­quest.

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