Military Advantage

Is Military Retirement Unfair and too Generous?

Author and Military.com contributor, Tom Philpott recently wrote that retirees shouldn’t fear the Defense Business Board recommendations to overhaul military retirement. Philpott points to DoD official statements that there are no plans for immediate changes and that any reforms would likely be “grandfathered” to protect current servicemembers and retirees.

However, Tom warns servicemembers and retirees to focus their concern on the other more likely changes that will affect retirement. Issues like the proposal to change the Cost-of-Living calculation, increased TRICARE fees, and the possibility of increasing the CSB/Redux bonus to entice members to take a reduction in retirement in exchange for a cash bonus.

I agree with Tom, that some of the reporting and reaction to the DBB’s proposal to overhaul the retirement system may have been a bit premature, but, I wonder what the Pentagon’s reaction would have been if they didn’t hear from the thousands of angry retirees and servicemembers.

Although DoD officials are downplaying the possibility of overhauling the current military retirement system and its affect on current members and retirees, there is still good reason for retirees to remain at least somewhat concerned, if not fearful.

In my opinion the one-sided language used in the DBB report is cause for unease among military servicemembers. The main point the DBB report appears to make is that the current retirement system is unfair.

The following are the points they make to support their “unfairness” claim:

  • Members of the military who retire before 20 years get nothing. Those who work 20 or more years get pensions worth 50 percent or more of their pay for life.
  • 83 percent of servicemembers don't get a pension, even after serving for 10 or 15 years, while 17 percent do get one.
  • Low-cost health care premiums for retirees on top of pensions make total retirement benefits "significantly more generous than civilian programs."
The report claims that the current military retirement system is too generous to those who make it 20 years or more and unfair to those who do not. Politically speaking, once the “fairness” card gets played all bets are off.

The report also claims that receiving a pension immediately after retiring (under age 59) is unique in the civilian sector. However, the report fails to recognize that many law enforcement organizations and fire departments have similar pension programs. In fact, the likely reason is due to the hazardous working conditions they all share.

NOTE: Referring to the military retirement system as a pension is a misnomer since it is technically reduced pay for reduced responsibility where a retiree can be involuntarily called back to active duty at any time.

As a former military career development advisor (retention specialist) my biggest concern is that proposed budget reforms such as a portable 401k retirement program, smaller pay raises, and tuition assistance cuts, combined with increased GI Bill benefits, will lead to an increased number of servicemembers leaving the military at the 10 year mark. Once a member is fully vested in their 401k and meet the requirements to transfer or use their full Post-9/11 GI Bill benefit, they may no longer find a motivation to stay past 10 to 15 years.

Although this mean a great opportunity for younger servicemembers, my fear is that the resulting lack of experienced mid-level leadership could have a lasting effect on our national defense and the future of an all-volunteer service.

Let your elected officials and DoD know how you feel about the proposal to overhaul military retirement.

Read Tom Philpott’s full article, “Fear 'Redux Bonus' Not Scary Headlines” for more details.

Show Full Article

Related Topics

Military Advantage

Most Popular Military Pay Articles

2018 Military Pay Charts

Check out the 2018 US military pay scale charts for all ranks for active duty, as well as Reserve and Guard components.

Military Retired Pay Overview

The military retirement system is arguably the best one around, but proper planning is needed to ensure you can retire comfor...

COLA for Retired Pay

Each year military retirees receive a Cost of Living Adjustment to their retirement pay. The increase is based on inflation.