Radical overhaul of military retirement eyed

Salt Jones

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Mar 22, 2011
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(CBS News) WASHINGTON - The military retirement system has long been considered untouchable - along with Social Security and Medicare. But in these days of soaring deficits, it seems everything is a potential target for budget cutters. A Pentagon-sponsored study says military pensions are no longer untouchable - they're unaffordable.
CBS News investigative correspondent Sharyl Attkisson reports high-level, closely-held meetings are taking place at the Pentagon regarding a radical proposal to overhaul retirement for the nation's 1.4 million service members - a bedrock guarantee of military service.

The proposal comes from an influential panel of military advisors called the Defense Business Board. Their plan, laid out in a 24-page presentation "Modernizing the Military Retirement System," would eliminate the familiar system under which anyone who serves 20 years is eligible for retirement at half their salary. Instead, they'd get a 401k-style plan with government contributions.

They'd have to wait until normal retirement age. It would save $250 billion dollars over 20 years.

Radical overhaul of military retirement eyed - CBS News

They talked about this during the Bush years. That's when they added the Thrift Savings Plan for the active duty military.
 
the familiar system under which anyone who serves 20 years is eligible for retirement at half their salary.
? I thought that went away years ago (ie for those joining up) and went to 33% or some such. (I still kick myself often for not staying in AD for 20 to get the 50%.)

They'd have to wait until normal retirement age. It would save $250 billion dollars over 20 years.
ie $12.5B a year, which is a relative drop in the bucket. And I question if it would save that much anyway.

Freakin idiotic IMO, but that's our beloved military big wigs all over eh? I'm still simultaneously laughing and cursing at all the time and money pissed away on the new uniform changes. How much did THAT brilliance cost?
 
What will it mean to retirees?...

Military Retirement Overhaul Set to Roll Out During Next Two Years
Nov 11, 2015 | Congress approved a historic overhaul of the military retirement system Tuesday, all but ensuring it will become law and the Defense Department will begin the rollout.
But troops will not get access to the new 401(k)-style retirement accounts that are the centerpiece of the overhaul until 2018. In the meantime, some key issues such as new programs to educate service members on the tricky world of investing and retention bonuses still need to be worked out, according to the Military Officers Association of America, the country’s largest officer advocacy group. The new blended system of accounts and pensions will replace the current retirement system, which pays out only after two decades of service, and is included in the 2016 National Defense Authorization Act. Following a vote in the Senate, the annual defense policy bill is now on its way to President Barack Obama, who is expected to sign it. “I would argue this is the most significant reform legislation that has been passed in 30 years,” Sen. John McCain, R-Arizona, a lead architect of the legislation, said during the floor vote Tuesday.

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The $607-billion NDAA bill will modernize the 70-year-old military pensions and extend retirement benefits to include the more than 80 percent of troops who now leave the service with no pension, McCain said. Sen. Jack Reed, D-Rhode Island, ranking member on the Armed Services Committee, said the reforms will put the Pentagon on better financial footing and set the stage for further overhauls in military pay and benefits. Troops will not see any of the retirement changes for two years. New recruits who sign up beginning in October 2017 will automatically have 3 percent of their pay diverted into a Thrift Savings Plan account, which the Defense Department will match with an amount equal to 1 percent of their pay. After two years of service, the Pentagon match could be increased by another 5 percent of pay. “Anybody who comes in after that date will automatically be in the system, they won’t have a choice,” said Steve Strobridge, director of government relations at the MOAA.

Those future service members will be able to adjust their contribution amounts or opt out of the system, but only after completing financial literacy training at their first permanent duty station. The 20-year pensions will remain for all but they will not be as lucrative for future service members. To support the new retirement accounts, future pensions will only be worth 80 percent of their current value. Troops who are already in the military and have less than 12 years of service can choose the assured pensions or opt into the new blended program, which will look very similar to the 401(k) accounts that are the norm in the civilian world. About 50 percent of those troops can choose to opt in during a one-time sign-up window through 2018, according to congressional research estimates, but participation will come with the same financial risks inherent with investment accounts, Strobridge said. “Obviously, the big issue is, ‘How much return are you going to get on your money?’” he said.

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