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 10 y ago
Posted 10 y ago
Responses: 7
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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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Although this is an personal issue to us, that doesn't mean that it isn't important financially to the government. The question we must ask ourselves is actually VERY simple.
"Is the current Military Retirement System sustainable?" It's that simple. If the answer is Yes, the follow on becomes "For how long?" If the answer is no, then we must change it.
When we look at systems like Social Security, apply the same logic. "Is this sustainable?" We know the answer is NO, therefore it must change.
From the DoD perspective, "our" system is NOT sustainable. It grows each year and makes it harder to balance other issues. Something has to give. I don't like it, but that doesn't change the facts of the situation. The Military Retirement System is a "leak in the boat" and it is actually one of the simpler ones to "patch" (not fix). We have all these other leaks in the boat, but they are either too big, or too complex to change... so we go after the things we can change.
"Is the current Military Retirement System sustainable?" It's that simple. If the answer is Yes, the follow on becomes "For how long?" If the answer is no, then we must change it.
When we look at systems like Social Security, apply the same logic. "Is this sustainable?" We know the answer is NO, therefore it must change.
From the DoD perspective, "our" system is NOT sustainable. It grows each year and makes it harder to balance other issues. Something has to give. I don't like it, but that doesn't change the facts of the situation. The Military Retirement System is a "leak in the boat" and it is actually one of the simpler ones to "patch" (not fix). We have all these other leaks in the boat, but they are either too big, or too complex to change... so we go after the things we can change.
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Sgt Aaron Kennedy, MS
MAJ Montgomery Granger I agree they are about priorities, however the issue is that Congress MUST look at military budget every 2 years. They only look at other spending "as needed" and it is an uphill fight to trim programs that have been added.
Do you go after the things you "have to" change anyway, or do you go after things you can't change?
I realize that patching the Military Retirement System is like putting a band-aid on a sucking chest wound, however when that is the only budgetary cuts you are making... that's where you go first.
Do you go after the things you "have to" change anyway, or do you go after things you can't change?
I realize that patching the Military Retirement System is like putting a band-aid on a sucking chest wound, however when that is the only budgetary cuts you are making... that's where you go first.
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MAJ Montgomery Granger
I don't think there is ANY wound. It's all about priorities. Obama care is a HUGE unnecessary funding black hole. Get rid of it. Department of Education is a total WASTE. Constitutionally the STATES are responsible for public education, NOT the federal government. MANY unnecessary agencies, including IRS. Why can't the U.S. Treasury be the receiver of taxes? 140+ years of no inflation with U.S. banking system - end the Fed and SAVE! Congress has the Constitutional power to create money, who needs the Fed? These savings could more than fund a measly old retirement system for the FEW in the military who even attain 20 good years of service. The rest will have to weigh a military career vs. a civilian career - TSP's won't do it.
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Sgt Aaron Kennedy, MS
MAJ Montgomery Granger - But this isn't about those other programs. It's about the "controllable portion" of the budget.
2/3 of the Budget is "Mandatory Spending" (Legislative). Of the remaining 1/3 or "Discretionary Spending," half of that is DoD (plus VA).
If we are talking about a household budget, it would be House, Car, Food (Mandatory) v. Everything else (Discretionary). The only place you can take money out of is the Discretionary budget. That means cuts to the Military. It really is that simple.
Military retirement shifts into the category of "Is it Sustainable?" when you look at it in those simple terms.
I'm not disagreeing that we can't cut elsewhere, however cutting elsewhere is just harder to do. That money is already spent or a "small" part of the overall picture in comparison.
https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
2/3 of the Budget is "Mandatory Spending" (Legislative). Of the remaining 1/3 or "Discretionary Spending," half of that is DoD (plus VA).
If we are talking about a household budget, it would be House, Car, Food (Mandatory) v. Everything else (Discretionary). The only place you can take money out of is the Discretionary budget. That means cuts to the Military. It really is that simple.
Military retirement shifts into the category of "Is it Sustainable?" when you look at it in those simple terms.
I'm not disagreeing that we can't cut elsewhere, however cutting elsewhere is just harder to do. That money is already spent or a "small" part of the overall picture in comparison.
https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/
Federal Spending: Where Does the Money Go
In fiscal year 2014, the federal government will spend around $3.8 trillion. These trillions of dollars make up a considerable chunk - around 22 percent - of the US. economy, as measured by Gross Domestic Product (GDP). That means that federal government spending makes up a sizable share of all money spent in the United States each year. So, where does all that money go?
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MCPO Roger Collins
Sgt Aaron Kennedy, MS - Very nice, Sgt. If we continue educating the masses, perhaps they will become more familiar with the budget and it's intricacies and a little how business and the economy fits together.
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In case you haven't noticed, it goes far beyond the retirement piece. The Government for the most part wants you to hurry up and die. Things like mandatory distribution, MEDICRAP, Star Chamber mentality etc., are aging unfriendly. Why? Because your usefulness is on the downside of the slope. Stay tuned for the results of mismanaging Social Security by robbing the account and then deciding your money isn't your money.
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The current and likely future Speaker of the House Paul Ryan believes the military 20 year retirement system is over generous and gives veterans a pension at 20 years that civilians dont get until they work for 40 years. (To social security age). Fortunately other members of congress on both sides of the aisle came together to repeal the cuts Ryan put into law. But with the tea party (aka now as the "freedom caucus" ) republicans already pressuring Ryan to go back to sequester levels and even lower on future budgets, I'm afraid things don't look good for the future.
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MAJ Montgomery Granger
I agree, things do not look good. If they mess with this too much (like they have already), I fear it may be too late. Military pay and benefits require LONG TERM and CONSERVATIVE planning. meaning, whatever it takes to keep the best and brightest IN the military for as long as possible considering threat and mission.
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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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I don't necessarily agree that the current system is "just fine". I'm sure we can all point to a few dozen leaders at 14-18 years who just don't want to do this anymore. They hate going to work every morning, their hearts just aren't in it, but they have no choice. They're trapped. It's either keep going, doing what you can no longer stand or have outgrown so you can hit retirement, or just get out and have wasted over a decade and change of your life and start over from scratch... Not a very appealing option. The new system allows people who just don't want to do this anymore to move on with their lives and not leave with nothing to show for their time...
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SFC Michael Hasbun
Honestly, I don't think it does what you describe. I think it just grants options other than simply all or nothing...
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MAJ Montgomery Granger
It has options alright, but NONE with a GUARANTEED income. ALL SPECULATION. No thank you! Glad I popped smoke in 2008!
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SFC Michael Hasbun
I don't know how you figure... None of the options have a "unless xyz occurs, then you get nothing" clause...
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