Paycheck Chronicles

What Do You Think About Possible Changes To The Retirement System?

According to a recent Star and Stripes article, the Defense Business Board (a 25 person panel tasked with helping the Department of Defense utilize best business practices) has recommended that the current military retirement system be seriously overhauled.  People are on fire and comments are lighting up the internet.

"As a possible fix, the review recommended the DOD test a plan that would calculate retirement pay based on a servicemember’s time in service and salary. The benefit would be payable at age 57 for those with 20 years of service and at 60 for those with less than 20 years. Under the plan, in which troops would be vested after 10 years, the DOD would annually contribute up to 5 percent of basic pay to the servicemembers’ retirement, similar to many civilian business plans.

The idea of a 30-year retirement with a possible pay-in by servicemembers is a more equitable possibility, according to Nathaniel Fick, chief executive officer for the Center for a New American Security, a Washington, D.C.-based think tank."

Sounds pretty controversial, huh? At first glance it seems like a bad thing for military members, and it might be.  However, more of Mr. Fick's thoughts were the subject of a  May 6, 2010 article at ForeignPolicy.com, where he writes: 

"In my admittedly anecdotal view, few (if any) good high school or college grads join the military for the promise of retirement pay, but plenty of mediocre ones decide to stay for it when they already have 10 or 12 years of service. Perverse incentive?

So can we shift the burden of those payments forward, offering better pay and recruiting incentives (better housing, better healthcare, etc) so that we at least accrue some warfighting benefit from the expense while also building in the flexibility to grow and shrink the expenditures since they're not then a lifetime mandatory benefit? Pay for it on the back end with a graduated retirement system starting at 30-ish years, perhaps split in some way between the current defined benefit system and a career-long defined contribution system.

The result: lower and more flexible personnel costs that are heavier on discretionary spending and lighter on mandatory spending, and a system more aligned with your view (quite correct, in my opinion) that people are much more important than things -- paying our young warfighters more and our "retirees" (if we can call someone in his 30s that with a straight face) less."

That sounds a little less negative, doesn't it?  There are so many sides to this issue that it would be impossible to talk them all out in a small forum like this.  It seems safe to say that we all understand that the country is in financial trouble, yet most military members will argue that the current retirement system is appropriate, for a variety of good reasons.

Petty Officer 1st Class Ethan Gurney, an electronics technician currently stationed in Naples, Italy, is quoted in the Stars and Stripes article:

" 'It’s not really fair to compare military service to the civilian work force,' said Gurney, who, at 38, is only a few months from retirement.

'The continuous deployments, living conditions, remote and hazardous duty stations are unique to the military,' he said. 'This isn’t a civilian company, so any civilian model that you use to compare to the military is impertinent. To do so is irresponsible at best.' ”

So, what do you think?  Should the retirement system should  be changed?  What changes would you recommend?  What changes would you be against?  Think outside the box here, folks.  No ideas too crazy, and please be nice.  I look forward to hearing your ideas.

For another view on the conversation, see Tom Philpott's column, Advisory Panels Say Military Benefits Unsustainable.

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