Posted on Feb 23, 2016
Military Retirement and the Never Ending Pentagon “Fixes"
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One thing is for sure, if something is working and working well, somebody in the current government will come along to try and fix it.
According to the Pentagon the new military retirement system on the table with the Defense Department’s 2017 budget request to Congress, that drastically changed the previous traditional pension plan, needs tweaking again. Remember, the Pentagon is a government agency run by CIVILIANS.
The civilians who administer the policies overseeing the military have a DIFFERENT retirement plan than the one proposed for the military.
The glaring difference is that civilian retirees, including members of Congress, are still offered a traditional pension which is figured on an average of their highest salary over three years. For regular Federal Employees the formula is 1.1 percent of their highest three years of basic pay if they retired at age 62 with at least 20 years of service.
If you are a member of Congress or a Congressional employee with 20 years of service at age 62 your retirement pay is calculated on 1.7 percent of high-three years of basic pay, PLUS 1 percent of your high-three for each year over 20.
If you were also a Civil Servant, that calculation is 2.5 percent of your high-three up to five years of service, PLUS 1.75 percent of other service when added to the 2.5 percent service does not exceed 10 years, PLUS 2 percent of your high-three for years of service over 10.
This same formula also applies to a special category of federal employee which includes air traffic controllers, firefighters and Capital police.
How nice for them.
I’m not saying these government employees are not important, they are. And some have critical responsibilities and earn every penny coming to them.
However, why the big push to overhaul the military retirement system for those at the tip of the spear?
The calculations for military retirees on the table now have measured buy-outs at two, five and 12 years. Where is the incentive for career military that provide the core institutional knowledge and experience necessary to preserve, protect and defend the United States at the highest possible level of excellence?
The proposed newest changes would appear to reward those staying over 26 years and at the highest ranks with an additional 1 percent incentive.
But the end game for the new retirement plan is not a pension. The end game is a Thrift Savings Plan with only projected and not guaranteed outcomes. In other words, market pressures determine the value of the holdings.
What if there’s still a bear market in 2 or 5 or 12 years? Or if the pendulum is swinging low and bearish when your window of separation arrives, what then?
Proponents argue it’s a more fair system for those who don’t wish to pursue a military career for retirement, meaning serving over 20 years in the old system. They feel that offering service members something when they move on is a better scenario.
That may be true, but why aren’t we looking at the nature of the institution?
We fight and win wars because we are an all -volunteer professional fighting force. We are the best in the world at what we do in part because one can make a career of it, and after 20 good years can count on a pension, i.e. guaranteed income based on achievement and longevity.
If you make it financially sweet to “pop smoke” (leave the service) early, at 2, 5 or 12 years, you effectively cut short the potential wisdom, knowledge and leadership stream that is the life blood of our military ‘s superior effectiveness.
The cost of draining military service experience too soon may be too high, but we won’t know it until it’s too late. By the time this new system plays out we may have already sold ourselves short, with no possibility of getting back to where we are – which is on top.
It seems to me that there are certain things you never want to mess with, and one of them is fair and appropriate compensation for those who are on the front lines and those who support those on the front lines. Without them we are exposed to disaster.
Congress needs to re-think the whole idea of eliminating a pension for those who serve honorably for 20 years or more, not just 1 percent more incentive for those with 26 or more years in. The gap is too big, and the possible consequences to dire.
The whole idea of revamping retirement compensation was in large part to save money. Do we really want to have to explain to our grandchildren and great grandchildren that the reason we can no longer effectively protect ourselves and our interests abroad was to save a few bucks?
According to the Pentagon the new military retirement system on the table with the Defense Department’s 2017 budget request to Congress, that drastically changed the previous traditional pension plan, needs tweaking again. Remember, the Pentagon is a government agency run by CIVILIANS.
The civilians who administer the policies overseeing the military have a DIFFERENT retirement plan than the one proposed for the military.
The glaring difference is that civilian retirees, including members of Congress, are still offered a traditional pension which is figured on an average of their highest salary over three years. For regular Federal Employees the formula is 1.1 percent of their highest three years of basic pay if they retired at age 62 with at least 20 years of service.
If you are a member of Congress or a Congressional employee with 20 years of service at age 62 your retirement pay is calculated on 1.7 percent of high-three years of basic pay, PLUS 1 percent of your high-three for each year over 20.
If you were also a Civil Servant, that calculation is 2.5 percent of your high-three up to five years of service, PLUS 1.75 percent of other service when added to the 2.5 percent service does not exceed 10 years, PLUS 2 percent of your high-three for years of service over 10.
This same formula also applies to a special category of federal employee which includes air traffic controllers, firefighters and Capital police.
How nice for them.
I’m not saying these government employees are not important, they are. And some have critical responsibilities and earn every penny coming to them.
However, why the big push to overhaul the military retirement system for those at the tip of the spear?
The calculations for military retirees on the table now have measured buy-outs at two, five and 12 years. Where is the incentive for career military that provide the core institutional knowledge and experience necessary to preserve, protect and defend the United States at the highest possible level of excellence?
The proposed newest changes would appear to reward those staying over 26 years and at the highest ranks with an additional 1 percent incentive.
But the end game for the new retirement plan is not a pension. The end game is a Thrift Savings Plan with only projected and not guaranteed outcomes. In other words, market pressures determine the value of the holdings.
What if there’s still a bear market in 2 or 5 or 12 years? Or if the pendulum is swinging low and bearish when your window of separation arrives, what then?
Proponents argue it’s a more fair system for those who don’t wish to pursue a military career for retirement, meaning serving over 20 years in the old system. They feel that offering service members something when they move on is a better scenario.
That may be true, but why aren’t we looking at the nature of the institution?
We fight and win wars because we are an all -volunteer professional fighting force. We are the best in the world at what we do in part because one can make a career of it, and after 20 good years can count on a pension, i.e. guaranteed income based on achievement and longevity.
If you make it financially sweet to “pop smoke” (leave the service) early, at 2, 5 or 12 years, you effectively cut short the potential wisdom, knowledge and leadership stream that is the life blood of our military ‘s superior effectiveness.
The cost of draining military service experience too soon may be too high, but we won’t know it until it’s too late. By the time this new system plays out we may have already sold ourselves short, with no possibility of getting back to where we are – which is on top.
It seems to me that there are certain things you never want to mess with, and one of them is fair and appropriate compensation for those who are on the front lines and those who support those on the front lines. Without them we are exposed to disaster.
Congress needs to re-think the whole idea of eliminating a pension for those who serve honorably for 20 years or more, not just 1 percent more incentive for those with 26 or more years in. The gap is too big, and the possible consequences to dire.
The whole idea of revamping retirement compensation was in large part to save money. Do we really want to have to explain to our grandchildren and great grandchildren that the reason we can no longer effectively protect ourselves and our interests abroad was to save a few bucks?
Retirement
Effectiveness
Command Post
Edited 9 y ago
Posted 9 y ago
Responses: 7
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My concern is that the new system will affect retention and longevity. The key difference between the military and civilian sectors is that the military cannot simply go out and head hunt senior leaders. They MUST be home-grown. That is not true in the civilian sector. The 20yr retirement was always a dangling carrot to give some tangible benefit to staying in the service for 20yrs, and keeping your valuable training and experience within the ranks. Remember, losing a service member is a loss not only in experience, but also ALL of the training dollars invested into that person.
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You are right in what you say, but if they grandfather all changes, it places in on the new recruits to make the decision as to whether or not to stay for a career. Things change, depending on what is going on in the world. These things happen all the time and when there is a need for troops, either they do something to incent the individual to make it a career, or institute the draft.
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