Dump the Military Retirement System? | Military Advantage Blog | Military.com | Terry Howell

Some in the DoD are push­ing to dump the cur­rent retire­ment sys­tem and replace it with a ver­sion of the “Thrift Sav­ings Plan” similar to the one cur­rently offered Fed­eral Employ­ees. This plan would allow DoD to save money by mak­ing con­tri­bu­tions to a civil­ian style 401(k) retire­ment plan.

Accord­ing to some reports, the DoD would also use the new retire­ment plan as lever­age or incen­tive by offer­ing increased con­tri­bu­tion rates for those who opt for mul­ti­ple deploy­ments, hard­ship assign­ments, and high demand or unpop­u­lar mil­i­tary occu­pa­tions. In addi­tion, ser­vice branches could use it to entice ser­vice­mem­bers to retire early or stay in longer.

Unlike past changes to the mil­i­tary retire­ment plan, which shielded cur­rent ser­vice­mem­bers from the changes, the plan pre­sented by the Defense Busi­ness Board would not grand­fa­ther cur­rent ser­vice­mem­bers. The plan would go into effect imme­di­ately and includes cur­rent and future ser­vice­mem­bers.

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Under that plan, new recruits would start imme­di­ately earn­ing TSP con­tri­bu­tions, but, would have no incen­tive to stay in the mil­i­tary for 20 or more years since they would not get a fixed-benefit pen­sion. Cur­rent ser­vice­mem­bers would begin receiv­ing TSP con­tri­bu­tions imme­di­ately and would earn a grad­u­ated per­cent­age of their pay if they stay in the mil­i­tary for 20 years or more years. Their fixed pen­sion rate would be based on their years of ser­vice when the new plan kicks in. For exam­ple a ser­vice­mem­ber who has 15 years of ser­vice would get 37.5 per­cent of their base pay at 20 years in addi­tion to the new TSP con­tri­bu­tions.

Some see this as a way to make the sys­tem more flex­i­ble or fair to those who serve less than 20 years and a great way to reduce the over­all cost of mil­i­tary retire­ment.

[BLOGGERS NOTE: A 2010 Defense Busi­ness Board slide show pre­sen­ta­tion states that “Pay­ing the mil­i­tary and their fam­i­lies for 60 years to serve for only 20 years” is unsus­tain­able. Many retirees may find the point of view that “only 20 years” of ser­vice shouldn’t earn ben­e­fits, trou­bling. The same slide pre­sen­ta­tion also refers to the mil­i­tary retire­ment sys­tem as a “sacred cow.” Seems to indi­cate the bias the board has toward mil­i­tary retire­ment.]

Whether you sup­port the over­haul plan or not, you should con­tact your elected offi­cials to let them know how you feel about this issue.

More details are avial­able at the Mil­i­tary Times.

via Dump the Military Retirement System? | Military Advantage Blog | Military.com.


One Reply to “Dump the Military Retirement System? | Military Advantage Blog | Military.com | Terry Howell”

  1. Some says that the military retirement system is unsustainable and in dire need of repair. And I couldn’t agree with that more. The current system encourages our military to leave at 20 years when they are most productive and experienced, and then pays them and their families and their survivors for another 40 years. 😦


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