Large Reduction In Military Retirement Being Considered (MRIDDICK Look)

[ltorlo64]

A DOD Panel, the Defense Business Board, is proposing a huge change to military retirement. Basically, instead of a pension after 20 years of service based on your base pay, the DOD would contribute 16.5% of your base pay into a Thrift Savings Plan (TSP) making something like a 401K. After 5 years of service you would be vested and get what had been put into your account. I guess if you serve less than 5 years the government gets it back.

The big concern is for those already on active duty and how to switch them to this system if it is adopted. The proposal would give soldiers and sailors a percentage equal to how long they have served if it is less than 20 years as a pension, but would not pay this pension until the member hits 60 years old. For example, if a soldier is at 10 years when this is adopted, that person would get 25% of his base pay (50% of 50%) and the DOD would start depositing 16.5% of the member's salary into a TSP account. It looks to me like a soldier or sailor who retires after 20 years would take a retirement cut of about 67% a month when his retirement starts to pay out and a cut of closer to 80% when you figure in the loss of pension from age 40 to 60. This would save a lot of money.

I am a fairly senior guy in my community and I got a call from one of my junior officers Friday night asking about this. He had just accepted orders to a new command and was making plans to stay in until at least 24 years. With this new proposal he is thinking of withdrawing his acceptance and retiring as quick as possible.

The other thing this new system does is remove the incentive for anyone to stay past 5 years, at least the retirement incentive. It actually looks as though for most jobs it would be better to get the training and leave instead of taking on the burdens of multiple deployements, getting shot at, frequent moves, etc, that comes with making the military a career.

Here is an article that gives more information and a link to the rest of the article.


DoD panel calls for radical retirement overhaul




By Andrew Tilghman - Staff writer
Posted : Monday Jul 25, 2011 13:24:26 EDT



A sweeping new plan to overhaul the Pentagon’s retirement system would give some benefits to all troops and phase out the 20-year cliff vesting system that has defined military careers for generations.

In a massive change that could affect today’s troops, the plan calls for a corporate-style benefits program that would contribute money to troops’ retirement savings account rather than the promise of a future monthly pension, according to a new proposal from an influential Pentagon advisory board.

http://www.airforcetimes.com/news/2011/07/military-dod-panel-calls-for-radical-retirement-overhaul-072511/

This article has a graph that makes things a little easier to understand (a picture is worth a thousand words).


July 29, 2011



If You Don’t Protect Yourself, Who Will? Congress is considering an array of major deficit-reduction initiatives, take a few minutes to visit your legislators in August.



Retirement Reform – What Would It Do? Several recent recommendations would make sweeping changes to the military retirement system. But how would they affect a real 20-year servicemember?



Will Current Troops Be Grandfathered? Maybe Not. A Defense Business Board task force recommends dumping the current defined-benefit military retirement system. And its “lower-cost” option would switch current servicemembers to the new system immediately – as private sector retirement conversions often do.

http://www.moaa.org/action/lac_issues/lac_issues_update/action_update_110729.htm

This proposal will definately help with the defense budget, but I am not sure that the cost will be more than we wish to pay.

[old Grump]

20% of the budget is military give or take a little depending on who posts the numbers. An awful lot of it is wasted expenditures going to arm false allies and on weapons systems and equipment never intended to be deployed.

Retirement pay is 9% of the military budget and another 5% goes to medical benefits for retiree's.

I can see cutting costs but at the expense of veterans and at the expense of incentives for career military? They were there when the country needed them and now they are done and that same government made up of civilians with guaranteed pensions of their own want to screw the military. I am on the edge of a major rant here so I'll shut up instead.

[Ruskiegunlover]

come on old grump, we've absolutely got to feed the leeches, and people who suckle off of uncle sugars tit! You cannot expect us to defend this country, and treat our men and women in uniform with respect when we've got single, unemployed, UNEDUCATED mothers shitting out their 11th kid that we all have to feed!

Man old grump, whats wrong with your priorities????

[imanaknut]

Of all the things to cut, why do they start with the greatest citizens of this country? Why mess with the great Americans who risk their lives protecting us and keeping us free? What is wrong with these morons in our government?!?!?!??!

[Partisan1983]

Seeing shit like this pisses me off......Rome here we come

[Justin]

Reading this makes me sick, why not cut the illegal immigrants who are on welfare and food stamps first?

[mriddick]

My son mentioned something about this the other night. It's an interesting proposal, I think it would be a good idea as a way to give something to vets who don't make it to 20. In that regard it might be better for all troops at the expense at those who have been in it for 20+ year retirement. It's sad but I know of several retirees who will literally brag they avoided combat but got their 20+ years in meanwhile I know young men who've spent so much time on combat deployments they are sick of it and want out. I'd rather they adopt a system that rewards those who serve in combat.

I have my ideas of what would be better but I guess something will have to be done at some point, I only hope Congress gets rid of their and other gov't pensions if the idea is to get rid of the military's. I wonder if in some way this isn't the military planning on the "super congress" not coming to an agreement which will cost the military half of the cuts if they don't (although I assume this has been in the works for quite a while).

[ltorlo64]

My son mentioned something about this the other night. It's an interesting proposal, I think it would be a good idea as a way to give something to vets who don't make it to 20. In that regard it might be better for all troops at the expense at those who have been in it for 20+ year retirement. It's sad but I know of several retirees who will literally brag they avoided combat but got their 20+ years in meanwhile I know young men who've spent so much time on combat deployments they are sick of it and want out.

I have my ideas of what would be better but I guess something will have to be done at some point, I only hope Congress gets rid of their and other gov't pensions if the idea is to get rid of the military's.

My wife calls this political blackmail. Most people are supportive of the military and of the sacrifices we give, so when the counrty says it is time to cut something the first thing on the chopping block is what the people like or what they get the most benefit out of (ie schools, fire and police). The idea being that because the politicians threaten to cut the essential programs first then we the people back off on our demands to lower spending or not raise taxes.

[mriddick]

Of all the ways to cut the military this is not the way to do it, we could close alot of bases all over the world and cut expenses much more then something like this will ever do.

As I said if they go after the military pensions they better have all the government pensions on the chopping block....

[ltorlo64]

My son mentioned something about this the other night. It's an interesting proposal, I think it would be a good idea as a way to give something to vets who don't make it to 20. In that regard it might be better for all troops at the expense at those who have been in it for 20+ year retirement. It's sad but I know of several retirees who will literally brag they avoided combat but got their 20+ years in meanwhile I know young men who've spent so much time on combat deployments they are sick of it and want out. I'd rather they adopt a system that rewards those who serve in combat.

I have my ideas of what would be better but I guess something will have to be done at some point, I only hope Congress gets rid of their and other gov't pensions if the idea is to get rid of the military's. I wonder if in some way this isn't the military planning on the "super congress" not coming to an agreement which will cost the military half of the cuts if they don't (although I assume this has been in the works for quite a while).

In a previous thread you asked what would happen is the people who are getting government checks got their checks cut by 60%. In this case, initial indications are that the mid to senior level leadership, those with 10-18 years, will get out. Those are the people we want leading the troops, supervising the technicians, planning the day to day work that our soldiers and sailors do. Not sure losing them is a good thing.

How about this as an example of unintended consequences of budget cutting. About 10 years ago or so the Navy cut out almost all technical schools in order to save money. The cost savings was significant. At about the same time, again to save money, the Navy cut back on maintenance related shore duty jobs, assigning all that kind of work (ie pump and vavle repairs, electric motor rewinds, electronic troubleshooting and repair) to contractors and DOD civilians in government shipyards. Again, the savings was substantial. Or it was until things started to break on deployed ships and there was no one on board who could repair the equipment. Now we have to send contractors out to the ship to fix what we used to repair on our own, at a drastically elevated cost. It has been estimated that we are now paying more for emergent repairs than we would have paid to keep the training locations operational. We will never get the schools back, but I am part of an initiative to get our shore duty jobs back. The problem there is now the unions get in the way. It is against their contract for a sailor to repair something that one of their union employees could fix, but we will work through that. But it is another unintended consequence of just trying to save money.

[ltorlo64]

Of all the ways to cut the military this is not the way to do it, we could close alot of bases all over the world and cut expenses much more then something like this will ever do.

As I said if they go after the military pensions they better have all the government pensions on the chopping block....

I agree, but it will not happen. BTW, thanks for looking at the thread.

[Solidus-snake]

Of all the ways to cut the military this is not the way to do it, we could close alot of bases all over the world and cut expenses much more then something like this will ever do.

As I said if they go after the military pensions they better have all the government pensions on the chopping block....

Youve been mentioning for quite some time now about cutting off peoples retirement funds and military pensions to save us from the debt crisis, I figured this was what you had in mind. You should know as well as anyone else while you were saying these things that the gov pensions will NEVER be touched.

[mriddick]

Yeah it does suck, but I think cuts will be made regardless. I'm not sure this is the right way to do it but chances are if we come to grips with our spending the military will have to take some of the cuts. I'd rather they reduce our presence in countries overseas then cuts like this first.



Youve been mentioning for quite some time now about cutting off peoples retirement funds and military pensions to save us from the debt crisis, I figured this was what you had in mind. You should know as well as anyone else while you were saying these things that the gov pensions will NEVER be touched.

On pensions and retirements, I've been saying it's silly to put all the cuts on the next generation and leave the present generation untouched. It's not so much lets cut pensions but if you are going to cut pensions don't offset them so it only affects those in the future generations. One of the issues we have with the budget and all fixes so far to date has been our pol's inability to even consider present systems and them offsetting cuts for the future. Not only does this do nothing for us today but it adds cost those future generations will have to pay back which in almost all plans add 10-15 trillion in debt to the 14 trillion we presently have. Being one who qualifies for a retirement sooner then later, I would rather pay then putting it off on my kids and grandkids. I've also said repeatably the cuts either need to be in the area of 40% or we could pay 40% more, but regardless that's the size of the problem either way you go...



As for the military, paying people to retire at 40 doesn't make sense in a world where people live to 85 and that's going to have to be addressed at some point I'm sure. However I've always thought our cuts should be in bases and wars where we are spending a billion dollars a week first...

[Solidus-snake]

Yeah it does suck, but I think cuts will be made regardless. I'm not sure this is the right way to do it but chances are if we come to grips with our spending the military will have to take some of the cuts. I'd rather they reduce our presence in countries overseas then cuts like this first.




On pensions and retirements, I've been saying it's silly to put all the cuts on the next generation and leave the present generation untouched. It's not so much lets cut pensions but if you are going to cut pensions don't offset them so it only affects those in the future generations. One of the issues we have with the budget and all fixes so far to date has been our pol's inability to even consider present systems and them offsetting cuts for the future. Not only does this do nothing for us today but it adds cost those future generations will have to pay back which in almost all plans add 10-15 trillion in debt to the 14 trillion we presently have. Being one who qualifies for a retirement sooner then later I would rather pay then putting it off on my kids and grandkids.

As for the military, paying people to retire at 40 doesn't make sense in a world where people live to 85 and that's going to have to be addressed at some point I'm sure. However I've always thought our cuts should be in bases and wars where we are spending a billion dollars a weeks first...


Yes, with the current plans I would be have been pretty screwed had I stayed in till retirement. A lot of my buddies are going to feel this crap and quite frankly it pisses me off quite a bit.

[mriddick]

Yes, with the current plans I would be have been pretty screwed had I stayed in till retirement. A lot of my buddies are going to feel this crap and quite frankly it pisses me off quite a bit.

I think the military will need cuts, the question might be is this the best cuts we can do when we are doing things like spending for 3 wars with no clear national interest in any of them. As ltorlo64 mentioned cuts like this are like when a school levy comes up for a vote, it's always boys football that's going to be cut, never the secretary to the principle... Still though 2 of my sons are planning on going on to retirement, even this plan is better (much) then any they could probably see in the private sector plus it gives them the bonus of getting something if they leave with less then 20 years in.

[Solidus-snake]

I think the military will need cuts, the question might be is this the best cuts we can do when we are doing things like spending for 3 wars with no clear national interest in any of them. As ltorlo64 mentioned cuts like this are like when a school levy comes up for a vote, it's always boys football that's going to be cut, never the secretary to the principle... Still though 2 of my sons are planning on going on to retirement, even this plan is better (much) then any they could probably see in the private sector plus it gives them the bonus of getting something if they leave with less then 20 years in.

I can definitely agree that cuts do need to be made to help with the deficit. One could be the enlistment benefits.

Last I checked the Army, Air Force, and maybe the Navy offer enlistment bonuses, really not sure bout the Coast Guard. I sure as hell didnt get one and wasnt offered one in the Marines, maybe the other branches should do the same.

Then theres the Tech. There is definitely some WAAAY overpriced Tech being tested and produced that could be done without.

[mriddick]

One thing I've talked about is the desire to set up these two tier systems where one group gets to a continue great deal (often proved to be unsustainable) then the next pays doubly hard simply because pols of today won't make the tough choices. Maybe it would be best to spread the hurt around so one group doesn't end up paying for everyone. To balance the budget today we need to cut our budget 40%, if we offset this cut a generation the next generation might need cuts of 80% or more... How anyone today can look at numbers like that and regardless say I want mine today just proves they don't care about the future generations.

In some ways this proposed system (see links above) seems to show that in how some will do very good under the current rules while future generations will be hit much harder then needed if that pain was spread around.

[ltorlo64]

I can definitely agree that cuts do need to be made to help with the deficit. One could be the enlistment benefits.

Last I checked the Army, Air Force, and maybe the Navy offer enlistment bonuses, really not sure bout the Coast Guard. I sure as hell didnt get one and wasnt offered one in the Marines, maybe the other branches should do the same.

Then theres the Tech. There is definitely some WAAAY overpriced Tech being tested and produced that could be done without.

The problem with getting rid of enlistment bonuses is the similar to reducing the retirement benefit. While pay is not bad, it is generally not as good as a civilian doing the same thing, especially if they are doing the same hours. The bonuses help to overcome that difference to allow us to recruit quality people. Quality people are difficult to recruit because they are sought after by many different organizations.

[Solidus-snake]

The problem with getting rid of enlistment bonuses is the similar to reducing the retirement benefit. While pay is not bad, it is generally not as good as a civilian doing the same thing, especially if they are doing the same hours. The bonuses help to overcome that difference to allow us to recruit quality people. Quality people are difficult to recruit because they are sought after by many different organizations.

There are also the young kids (like I was) enlisting at 18 or 19 fresh outta highschool and are willing to choose so and so branch because of the bonuses they offer. I wanted to be a Marine so I didnt care they didnt offer bonuses. This is a big factor in recruiting though and I can see your point.

[alismith]

Could this be just one step in making our military weaker? It sounds too well orchestrated to be "random fallout" from the economic crisis our leaders have gotten us into.

[Ronwicp]

They have been talking about this for a while. I just wish they would cut fat ass welfare momma first.

I am on the short list to lose my job because I am a full time National Guard guy and the funding is forcing some cuts. Most of the enlisted are set to be demoted as a "realignment" of rank structure, to save money.

I have mixed feelings about it. I cant stand up on my soapbox and demand cuts in govt spending and then get mad when it is me that gets cut.

On the other hand, the day I lose my job and come home and see that fat ass welfare momma across the road sitting out front smoking and grilling steaks after she got done watching soaps on her 60 inch flat screen is the day yall might read about me in the paper. Just sayin.

[Solidus-snake]

They have been talking about this for a while. I just wish they would cut fat ass welfare momma first.

I am on the short list to lose my job because I am a full time National Guard guy and the funding is forcing some cuts. Most of the enlisted are set to be demoted as a "realignment" of rank structure, to save money.

I have mixed feelings about it. I cant stand up on my soapbox and demand cuts in govt spending and then get mad when it is me that gets cut.

On the other hand, the day I lose my job and come home and see that fat ass welfare momma across the road sitting out front smoking and grilling steaks after she got done watching soaps on her 60 inch flat screen is the day yall might read about me in the paper. Just sayin.

I hear ya man, most defintely. I see a lot of that shit around my area and is sickens me.

[arcangel]

Wow this is BS, our military deserves better than this. For all the hard work, and hardships our military goes through this is totally not cool.

[T2K]

It does sound good in that it gives something to men and women who serve, but not for 20 years.

Having said that, we can cut A LOT from our defense budget and still be the #1 military in the world and still take care of our troops and veterans. Foreign bases is one area (Germany can take care of itself!), procurement programs that go nowhere is another.

[ltorlo64]

It does sound good in that it gives something to men and women who serve, but not for 20 years.

That is a point that people keep making, it is more fair for the people who only do one tour. In my mind, if we tell someone something and then stick to it, that is fair. It is not a secret that people have to do 20 years to get their retirement in the military, so it is not unfair to actually do that.

On another note about setting up the 401K type plan for people who do only a tour or two. I got out of the Navy at the end of my first tour and got a job with a growing company. The company I went to work for had a 401K with matching contributions. I was making good money and my wife was working as well, but we decided not to contribute to our retirement at that time so we could use the money for other things. The reason we made that decision is because retirement was so far away. I don't think I am alone in thinking like this. To say that someone working for the military for 5-8 years and getting nothing for retirement is what they would most likely have done had they not joined the military.

Last, making these changes will remove the incentive to keep people in until 20 years. The big difference between the military and civilian coorporations (besides the work hours, time away from home and friendly people trying to kill you) is that you cannot develop military skills when working as a civilian, but you can develop skills necessary for civilian employment while in the military. Where else, except maybe in the merchant marine will you learn how to fight a fire in the closed confines of a ship? What about leading a rifle team or an entire platoon in combat? These are the skills that are learned from actual military service, over time, and cannot be learned quickly. The theory of war takes years to understand. Look at what happens when our politicians don't let the Generals and Admirals run our wars, they start to drag on and on. Without people willing to stick around, we won't have to professional warriors we have now.

We may need to change our retirement plan, but to base it off a civilian coorporate model I think is a bad idea.

[El Laton Caliente]

Of all the things to cut, why do they start with the greatest citizens of this country? Why mess with the great Americans who risk their lives protecting us and keeping us free? What is wrong with these morons in our government?!?!?!??!

Because the left sees veterans as the enemy. They vow to uphold the Constitution and vote mostly Conservative.

[Izzy]

Sounds like a 16.5% PAY CUT to me, to fund what was originaly paid for by Uncle Sugar.

Nice way to save money on the backs of the personell.

[ltorlo64]

Sounds like a 16.5% PAY CUT to me, to fund what was originaly paid for by Uncle Sugar.

Nice way to save money on the backs of the personell.

Actually the way this is supposed to work is the military personnel will in effect get a pay raise of 16.5% while getting their pensions docked by almost 67%, when they start getting it. We will still get our normal base pay, and then the DOD will add 16.5 % more to a TSP account of our choosing. For young guys just starting out this could work out well. For guys with more than 10 years in, the compounding that they have missed out on will prevent them from ever catching up. Plus putting off the retirement until age 60 is a bother.

I have looked at my retirement as a way to offset the salary plunge I will take when I retire, most of us do. After being in the military for 20 years and getting out, it is rare to find a job that pays what you were making on active duty. While you may have a bunch of experience, civilian companies don't give you the same credit for the 20 years experience they give to someone who has been in the civilian sector for that 20 years.

[Warthogg]

I can see cutting costs but at the expense of veterans and at the expense of incentives for career military? They were there when the country needed them and now they are done and that same government made up of civilians with guaranteed pensions of their own want to screw the military. I am on the edge of a major rant here so I'll shut up instead.

Yup.

My surprise factor at this money saving approach hoovers below zero. Always the fools we elect will begin cutting where we should not cut. Just a given.



Wart

[btcave]

Well something needs to change in the military retirement system to make it sustainable. I've got my 20 yr letter and will collect the pension at 60. It's the National Guard system for the part time guardsmen like myself. It's not the whole plan for my retirement, but it is a part. Might need to be looking at putting more aside for the next 18 years until I reach 60.

Edit to clarify. Put more aside than what I currently contribute to my civilian 401k and me and the wife's IRA's.

[mriddick]

Well something needs to change in the military retirement system to make it sustainable. I've got my 20 yr letter and will collect the pension at 60. It's the National Guard system for the part time guardsmen like myself. It's not the whole plan for my retirement, but it is a part. Might need to be looking at putting more aside for the next 18 years until I reach 60.

Probably the best option IMO. It allows a livable pension at the time a person should be needing it, if something like was in effect you could probably open it up to anyone serving past a vested point (5 yrs service) without adding much to the cost. You'd keep the incentive for longer service times and fix whatever this 401K type program is supposed to fix.

[ltorlo64]

Probably the best option IMO. It allows a livable pension at the time a person should be needing it, if something like was in effect you could probably open it up to anyone serving past a vested point (5 yrs service) without adding much to the cost. You'd keep the incentive for longer service times and fix whatever this 401K type program is supposed to fix.

Could you explain what you mean? I have read yours and BTCAVE's posts a couple of times and I don't get what you are trying to explain.

[mriddick]

Keep the current pension payouts but don't allow it to be drawn till age 60. I've stated something like this before, however I would allow for earlier payouts based on combat deployments.

[ltorlo64]

Keep the current pension payouts but don't allow it to be drawn till age 60. I've stated something like this before, however I would allow for earlier payouts based on combat deployments.

Thanks. You have, I just didn't get there from reading the two posts together.