MILITARY UPDATE: Possible retirement plan changes debated

The Defense Business Board’s proposal to shift the military to a cheaper “contributory” retirement plan is “radical” and was released publicly without regard for the impact it would have on troop morale in wartime.

That was the charge leveled last week by Rep. Joe Wilson, R-S.C., chairman of the House armed services’ subcommittee on military personnel, during a hearing where defense officials were discussing a more thorough review of retirement for the future force only.

The board report, which called the current retirement system “increasingly unaffordable,” took several hits, including from military associations and, indirectly, defense officials.

Jo Ann Rooney, principal deputy under secretary of defense for personnel and readiness, said “the department acknowledges the military retirement system appears expensive (but) it is neither unaffordable nor spiraling out of control as some would contend.”

Rooney said DoD is studying ways to revise retirement, in part because the national debt crisis is requiring deep defense cuts. She said the study is “weighing the impact of a new system on recruiting and retention, considering the welfare of individual service members and families, which includes grandfathering our existing force…and acknowledging our responsibilities to the American taxpayer.”

Some House colleagues joined Wilson in criticizing the business board. Rep. Joe Heck, R-Nev., an Army Reserve physician, blasted the board for proposing a civilian-like retirement plan with only sketchy information on how it would affect those serving today, including in Iraq and Afghanistan.

“Then I received the emails and phone calls from folks” worried about their retirement and describing how morale was falling in theater, Heck said.

But other lawmakers found merit in the board’s blunt findings that the current retirement system is too rigid, too costly and provides no benefits to the 83 percent of service members who separate short of 20 years.

Rooney gave Wilson and colleagues the same assurance they got from Defense Secretary Leon Panetta and Army Gen. Martin Dempsey, chairman of the Joint Chiefs, that current members would be protected from proposed retirement changes.

Still, Wilson used the hearing to chastise the busines board, an advisory body of business executives to the defense secretary, suggesting it was wrong last July to release a controversial plan that, under one of two scenarios, would expose many current members to dramatic benefit changes.

Any damage done to morale deepened as defense leaders were slow to put the report in perspective, and as some news organizations gave the plan more attention than it deserved, given that no defense leader, civilian or military, had endorsed it.

Wilson said the busines board “was quick to present a major retirement reform proposal” that would move “aggressively toward a private-sector, defined-contribution system based on personal investments of service members.”

He suggested board members “knowingly elected to pursue a very controversial proposal with immediate negative consequences for morale and combat readiness.  And yet they were unwilling to come before this subcommittee and defend their actions,” Wilson said.

Rooney said the report was only one “data point” in the ongoing review.  Vee Penrod, deputy assistant secretary for military personnel policy, said computer modeling on the business board plan so far shows that it would have a negative impact on force retention.

Rep. Susan Davis, Calif., ranking Democrat on the subcommittee, welcomed some of the arguments for reform.  She said, for example, that fairness must be a goal when only 17 percent of members serve long enough to retire, and that some who leave without benefits have more time in combat than members who reach the 20-year threshold.

She also noted that today’s retirees live longer than folks did when the 20-year formula was set in 1949.  Life expectancy then was 66.2 years for a white male and 58.9 for a black male.  By 2009, it had climbed to 76.2 years for a white male and to 70.9 years for a black male. And many retirees go on to have “another full career in a different field,” Davis said.

Steve Strobridge, director of government relations for Military Officers Association of America, said early vesting would reduce the effectiveness that cliff vesting at 20 years provides.

“If you want to talk fairness,” he said, “the first thing we have to do is be fair to the people who suffer and sacrifice the longest. That’s the career person. The last thing we should be doing is cutting their career package to pay people who leave.”

But Rep. Mike Coffman, R-Colo., a former Marine and Army reservist with enough service time to earn an annuity at age 60, said the system needs reform so at least some benefits accrue to members having fewer than 20 years. Coffman pressed for higher compensation, if not specifically more retired pay, to reward the toughest military careers.

“There is such a wide disparity in occupations in the military,” he said  “I have to tell you there are a lot of them where people show up to work in the morning and leave in the afternoon, and it’s not a whole lot different from, quite frankly, a civilian job,” Coffman said. “And there are those jobs that are just tough.”  Those with tougher jobs, he said, should be paid more.

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