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Obama: More Study Needed Before Overhauling Troop Pay, Benefits

President Barack Obama speaks in the Brady Press Briefing Room of the White House in Washington, Thursday, April 23, 2015. (AP Photo/Susan Walsh)
President Barack Obama speaks in the Brady Press Briefing Room of the White House in Washington, Thursday, April 23, 2015. (AP Photo/Susan Walsh)

President Obama said he wants more time to review controversial proposals that would overhaul troop pay and benefits.

His administration "fully supports" the underlying objectives of recommendations made in January by an independent military compensation commission, according to a letter he sent lawmakers Thursday.

Indeed, the president supports 10 of the Military Compensation and Retirement Modernization Commission's 15 proposals designed to save $12 billion a year in personnel costs by 2040.

But the White House wants to better understand the most controversial proposals, including offering troops 401(k)-like retirement plans before they reach 20 years of service, replacing the existing Tricare program with a choice of commercial health insurance options, and consolidating commissary and exchange stores on bases, among others.

"With respect to the remaining recommendations, given their complexity and our solemn responsibility to ensure that any changes further the objectives above, we will continue working with the Commission to understand how the following proposals would affect the All-Volunteer Force," he wrote.

Obama cited the recommendations dealing with the blended retirement system, reserve component duty statuses, exceptional family member's support, commissary and exchange consolidation, and military health care system.

Related: Let your elected officials know your thoughts on the proposed plan to overhaul military benefits.

His letter came the same day the House Armed Services Committee, led by Rep. William "Mac" Thornberry, R-Texas, voted to overhaul troop retirement benefits despite objections from members who served in the military.

The committee voted 60-2 to approve the 2016 National Defense Authorization Act, which included the future retirement change as part of a policy and spending blueprint for the fiscal year beginning Oct. 1. The legislation will head to the full chamber for a vote by mid-May but would still have to be agreed to by the Senate and signed by the president before becoming law.

Obama's letter suggested that he may block the Republican push this year to offer service members a 401(k)-style retirement plan by 2017 with matching contributions and full vesting after two years -- as recommended by the independent commission.

Under the military's existing defined-benefit plan, most officers and enlisted personnel who serve 20 years receive annual retirement pay equal to half of their average basic pay over their last three years of service. The House's defense legislation would reduce that figure from 50 percent to 40 percent, in part to fund a 401(k)-like defined-contribution Thrift Savings Plan for the more than eight in 10 service members who leave the military without getting any retirement benefit.

The retirement change would include a lump-sum "continuation" payment after 12 years in exchange for four more years of service -- a force-shaping tool designed to keep troops in the military and entice them to consider staying for a full 20 years. Unlike the commission's recommendation, it would also extend matching contributions to the TSP beyond the two-decade mark to retain senior NCOs and officers.

Both the president and House Republicans punted on the commission's recommendation to do away with the three Tricare plans for military families, reservists and working-age retirees, and instead let them buy one from a list of commercial health care providers using a new Basic Allowance for Health Care, or BAHC.

"I agree with the Commission that we need to continue to improve the military health care system," Obama wrote. "The health care reforms proposed in my Fiscal Year 2016 Budget are a good first step and offer service members, retirees, and their families more control and choice over their health care decisions."

The Pentagon's spending plan for the fiscal year beginning Oct. 1 would consolidate the three Tricare options into a single plan with slightly higher deductibles and co-pays, and increase pharmacy co-pays and add an annual enrollment fee for Medicare-eligible retirees in Tricare for Life.

"DoD looks forward to working with the commission, our interagency partners, and interested members of Congress over the course of this year as we develop additional reform proposals to be considered for the president's fiscal year 2017 budget," Defense Secretary Ash Carter wrote in a statement.

Meanwhile, Obama and GOP members on the defense committee also disagreed with the commission's recommendation to consolidate the commissary and exchange stores on military bases into a single system, even though the idea has gained traction with some veterans groups.

The Pentagon's proposed budget would decrease commissary subsidies, by $100 million to $1.2 billion, in part by reducing the number of days the stores operate, though most are expected to remain open five or more days a week.

The House defense panel rejected the Pentagon's proposal to decrease funding for commissaries, which some say could result in more expensive groceries and employee layoffs. The committee also dismissed the commission's proposal to merge commissaries and exchanges.

In other matters potentially of interest to military families, Obama agreed with a recommendation to do away with the Financial Subsistence Supplemental Allowance (FSSA) for stateside service members. Unlike the food stamp program, known as SNAP, the allowance is added to troops' paychecks. Only 285 military families received the allowance in 2013, according to the Pentagon statistics.

--Brendan McGarry can be reached at brendan.mcgarry@military.com.

--Amy Bushatz contributed to this report.

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