Posted on Aug 15, 2014
Why does a SM forfeit retirement money after completing there ADSO if less than 20yrs AFS?
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Current policy is "SM forfeits retirement money(s) for serving anything less then 20yrs". WHY? If the SM were a civilian employee it wouldnt matter who they worked for, the 401K (or other form of retirement account) carries forward, wherever they go and whomever they work for; so WHY the forfeiture of retirement funds? who came up with this policy? and why was it implemented knowing it was unfair to the SM? Your thoughts.
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Military service
Military service
Posted >1 y ago
Responses: 4
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First off, understand what "retirement pay" really is. It's not a true pension or a retirement fund like a 401K. It's more correctly a retainer fee. As a retired member of the armed forces, technically, you are STILL in the military. True, you are no longer subject to UCMJ, nor carry the authorities that you did as an AD SM, but you are also subject to recall whenever the military needs you. Someone who is totally out (officer who has resigned their commission and/or vet who no longer has an IRR commitment) is not subject to recall. They are no longer being retained, so they do not get any pay. Reduced pay for reduced service.
Second, it was designed to promote the longevity that is needed to make a professional military force possible. 20yrs may be an arbitrary number, but it does get the most value out SM's who may not be suited for higher rank or responsibilities.
Second, it was designed to promote the longevity that is needed to make a professional military force possible. 20yrs may be an arbitrary number, but it does get the most value out SM's who may not be suited for higher rank or responsibilities.
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LTC Paul Labrador
Incidentally, this retirement set-up is the reason why retired SMs are still referred to by their rank. They are still whatever rank they retired at (generally) only on the retired rolls.
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It's not that you forfeit the retirement - it's that you haven't earned it yet. I know it sounds like splitting hairs, but it's not. When I enlisted in 1994, I knew that 19 years and 364 days was a job; twenty years was a career. I accepted that when I separated in 2004. I also understood that when I came back to resume my career.
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CPT Benjamin S. The "fund" you are discussing is not a fund. The retainer pay that LTC Paul Labrador mentioned is part and parcel of the DOD budget. From my understanding there is no "set aside" in a "fund"...it is part of the annual budget. The only thing that is in a "fund" is Social Security and Medicare. Ergo, if you want the retainer pay, under current law you must complete 20 years of service. There is no retirement pay. You might contact your personnel - or whatever offie Army types go to in order to discuss finances to get specifics.
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LTC Paul Labrador
We tend to consider it a "pension" because recalls are so very rare. But, as I have been told and will experience myself likely next year, during your ACAP briefings it is explained exactly what your retired pay is and the quid pro qous that come with it.
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A 401K is a contribution plan that you must put your own money into (some companies do a match but are not required to). In the military you have the TSP which in essence is a 401K without a match. You take your TSP with you when you leave AD however you can no longer contribute to it. This can be left alone or rolled over into a new 401K or an IRA.
So in essence you do not loose any money. What you do loose is the benefit of a pension which is granted to you at 20 years. That pension can be awarded with less TIS as the DoD drawsdown its uniform service.
So in essence you do not loose any money. What you do loose is the benefit of a pension which is granted to you at 20 years. That pension can be awarded with less TIS as the DoD drawsdown its uniform service.
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CPT Benjamin S.
It is listed on my LES under "RETPLAN", just to the right of my DIEMS date under section of "SUMMARY". Lets not get off topic, lets redress the question from a different perspective; Before TSP, IRA, 401K, SM had to receive pension money from somewqhere right?, example: I work for you for 20yrs and according to you never paid into the pension, then where do funds come from and why whould the military pay me a opension if I didnt contribute? Thanks for the discussion by the way.
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SSgt Gregory Guina
A pension or as LTC Paul Labrador correctly stated retainer pay is a benefit that is offered to us after completing 20 years of ADS. I have not paid into the pension system that the government will use to pay this (unless you count federal income taxes) from any of the compensation that I receive for my AD pay.
If I had a deduction from my pay and allowances into a pension system then I coud see your point. Since there is no deduction I would say that I do not pay into a retirement plan.
If I had a deduction from my pay and allowances into a pension system then I coud see your point. Since there is no deduction I would say that I do not pay into a retirement plan.
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LTC Paul Labrador
Bear in mind, 20yrs is an arbitrary number designed to get the most ROI out of service members. The numer can be reduced (ie to 15 in cases of early retirement), but it doesn't change the fact that it's still a retainer, not a pension.
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