September 12, 2013
President Obama wants to consider sweeping changes to the military’s retirement and compensation system, but he also said that all current troops should be grandfathered under the current retirement plan if they choose.
Obama on Thursday issued instructions to the Military Retirement and Compensation Modernization Commission, a task force created by Congress and intended to inform and jump start efforts to overhaul the current military pay and benefits scheme.
The principles that the panel will focus on are the same outlined in the legislation that created it. In addition to retirement, Obama said, the commission should examine the “interrelationship of the military’s current promotion system … as well as associated force shaping tools,” according to the Sept. 12 letter.
Some of the unofficial retirement proposals include proposals that would give some retirement benefit to troops who leave before the 20-year mark. Under the current rules, most service members who leave before serving 20 years get no retirement benefit.
Some of those alternative programs may be attractive to younger troops who may prefer to serve five or 10 years and separate with a limited retirement benefit.
But Obama’s instructions will offer some reassurance to troops who worry that the pension system could change before they reach retirement age.
“The Commission’s recommendations for change must grandfather any currently serving members and current retirees in the current military retirement systems, but may allow current service members and current retirees the choice to change to your proposed retirement system,” the letter said.
Military pay should be “comparable” and “competitive” to civilian and private-sector wages and benefits packages.
But the commission likely will have to recommend shrinking the current package to some degree.
“The military retirement and compensation system should be fiscally sustainable in order to ensure long-term certainty for service members and retirees,” the letter said.
Military personnel costs have nearly doubled since fiscal 2001 and now consume one-third of the Pentagon’s base budget. That is partly due to soaring health care costs and generous compensation raises that Congress approved at a time when troops were facing repeated deployments to Iraq and Afghanistan.
Congress ordered the Pentagon to submit recommendations to the task force in November, and a final report is due to the White House on May 1, 2014. The resulting recommendation may lead to new legislation, which is required to make any substantive changes to the military’s retirement and compensation system.