Aug 18 2011
Please Note: MOAA has established a single landing page for the retirement proposal here: http://www.moaa.org/retirementcuts
In July of 2011, the Defense Business Board presented a revamping of the military retirement structure, based in large part on the findings of the Quadrennial Review of Military Compensation of 2010. The proposal has been met with serious concern and strong opposition by MOAA and other organizations. In simple terms, the proposal would do away with the 20 year service pension plan currently in operation and replace it with a 401k style savings plan that would start at the beginning of a serviceman’s career. We believe that the proposed changes both significantly devalue core career incentives and would harm recruitment and retention efforts. Anyone familiar with the REDUX program, which was so detrimental that it was significantly altered in 2000 and now is offered as an alternative choice of retirement options, can see how this program would play out.
For a look at what the DBB proposed, click here.
MOAA has written about the retirement overhaul proposal several times. From the July 29th Legislative Update:
“MOAA believes the QRMC plan would do grave damage to long-term retention and readiness. By dramatically reducing its financial commitments to servicemembers without any reduction in the enormous sacrifices demanded of career troops and families, it would destroy the sense of reciprocal commitment between member and service.”
From the August 12th Legislative Update:
“The new retirement reform proposals usually envision even more severe cutbacks of guaranteed retired pay amounts, relying more on a contributory Thrift Savings Plan (TSP) system under which services would contribute varying amounts each year depending on service needs for particular skills. Under that system, full retired pay wouldn’t start until age 57 and TSP withdrawals wouldn’t start until age 60.
Just as the Redux cut was applied prospectively (that is, only to people who entered service after the retirement law was changed), most who have endorsed major retirement changes envision applying the new rules only to new entrants.
But a recent retirement task force briefing to the Defense Business Board called that a “high-cost option.” It also highlighted a “lower-cost option” under which all current members would be converted to the new system as of a specific date — grandfathering only service already rendered as of that date.
It’s not clear exactly how that might work. A person with 20 years of service as of the conversion date might have future retired pay capped at 50% of high-three-year average basic pay, even if he or she served another 10 years, with subsequent service earning only some level of TSP deposits. A person with 10 years as of the conversion date who went on to complete a career might end up drawing retired pay capped at 25% of high-three-year average basic pay.
But this is only speculation, because no details or decisions have been offered yet.”
It is important to note that the DBB proposal is not the new law, and will only be one of the many possible options that DoD and Congress consider in the coming months and year. But with the debt talks that are ongoing and the requirements of automatic defense reductions that were written into the recently passed debt ceiling deal on the table, retirement benefits are in dangerous territory.
To help illuminate the dangers and inform the public of what is happening with the retirement discussions, MOAA’s Director of Government Relations, Col Steve Strobridge, USAF (Ret.), fielded questions in an interview with the Washington Post on August 11th, and produced the video that you can view below.
You Can Help
What can you do?
1 – Send your elected officials a MOAA-suggested message urging them to ensure that ongoing budget-cutting efforts don’t undermine the core pillars that are essential to sustaining a high-quality all-volunteer force.
2 – Urge all of your friends and relatives to do the same.