One goal of the proposal is to help attract and retain young cyberwarriors who might want to hone their high-tech skills in the military but do not plan to stay for the 20 years now required to earn a pension at 50 percent of pay.
COLUMBIA, S.C. — Congress is considering changing, for the first time in decades, the way service members get retirement pay.
Military retirement now carries an all-or-nothing pension plan that requires a minimum of 20 years of service. The new plan would cut those pensions to 40 percent of pay from 50 percent and create a matched 401(k)-style plan open to all service members.
The new retirement rules would affect all troops enlisting after the new plan is put in place in October 2017, Military Times reported. Troops already in the ranks could opt into the new plan or stick with the current “cliff vesting” system, it said.
New retirement plan
A new military retirement plan is being considered by Congress that would add to the present pension system. It would:
• Cut pensions to 40 percent from 50 percent
• Establish a 401(k)-style plan for all service members
• Match up to 5 percent of pay
• Allow soldiers with 12 years of service to draw from the plan
— The (Columbia, S.C.) State
The system has to change in light of budget cuts being made after 14 years of war, says Col. Bryan Hilferty, of Sumter, who retired last August from U.S. Army Central, formerly Third Army.
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“We have to modernize and economize the system,” said Hilferty, U.S. Army Central’s former director of communications. “This is one hack at it.”
One goal of the proposal is to help attract and retain young cyberwarriors who might want to hone their high-tech skills in the military but do not plan to stay for 20 years.
The plan is still at the subcommittee level in both the U.S. House and Senate. With the end of major ground wars in Iraq and Afghanistan, the U.S. military is drastically cutting personnel and budgets.
Any cuts would have profound effects on military installations.
For instance, the number of new soldiers trained at Fort Jackson, S.C., the nation’s largest Army basic-training installation, would drop to about 17,000 a year from 45,000, if worst-case-scenario staffing cuts contemplated by the Army are enacted, according to the post commander. An additional 27,000 soldiers a year receive advanced training at the fort, such as the drill-sergeant school and the chaplain’s school, which also would be heavily affected.
But no one knows for sure, and that uncertainty could continue for a year, until Congress decides whether to let $1.2 trillion in budget cuts kick in — half to the military, half to domestic spending, called the sequester.
Overhauling the retirement and compensation systems is one cog in that budget wheel.
The 401(k)-style savings plan was recommended by the Military Compensation and Retirement Modernization Commission. It recently was embraced by the House Armed Services Committee, and a version is being considered by the Senate Armed Services Committee.
Committee chairman Sen. John McCain, R-Ariz., said some version of the plan likely will be included in a draft of the annual defense-authorization bill later this spring. It is already in the House bill.
The compensation commission was asked two years ago to examine the military’s long-term pay and benefits needs. Its recommendations included government contributions to an investment account matching up to 5 percent of troops’ base pay.
Those who serve at least 12 years would see some bonuses and preserve some of the current 20-year retirement benefit, though all retirement payments would be scaled back by up to 20 percent.
Some veterans organizations worry the changes will hurt retention of talented soldiers, sailors, airmen and Marines.
“The new proposal doesn’t have enough in it to retain the very best officer for 20 years,” said retired Army Col. Mike Barron, spokesman for the Military Officers Association of America.
Barron added that young service members often don’t have the financial savvy to handle their own 401(k) plan. And having to contribute to it would force lower-paid service members to choose between retirement and bills.
The officers organization and some other veterans groups favor a “blended” plan that would create the 401(k) system but retain the full pension plan, he said.
Soldier-advocacy organizations such as the Military Officers Association that want a second layer of retirement plans “just want more, more, more” and do not recognize that active-duty soldiers face losing their jobs. “That is not selfless service,” he said. “It’s not patriotic.”
Other organizations, such as the Veterans of Foreign Wars, said during the House committee hearings that the new plan would help the 83 percent of veterans who did not reach 20 years of service.
According to the Military Times, a spokesman called the pension system “rigged” against vets who may have served four or five deployments in Iraq and Afghanistan but didn’t reach 20 years of service.
Hilferty agreed, adding that shifting away from a pension system would lead to a more balanced service.
The present plan “incentivizes things you don’t want to happen,” he said. “You don’t want everyone to stay in for 20 years. We need more privates than master sergeants. You need more lieutenants than generals.”
Sen. Lindsey Graham, R-S.C., who chairs the Senate Armed Services Committee’s personnel panel, told Military Times his panel’s details on similar retirement changes have not yet been finalized. But Graham said he supports “the general idea of a blended plan in the future.”
However, the new military-authorization budget still has to pass the full House and Senate and be signed into the law by the president