Group officials blast retirement pay proposal - Military Retirement - Navy Times

Group officials blast retirement pay proposal

An independent commission’s call for an integrated active and reserve retirement system — which would put an end to immediate retirement pay for active-duty members after 20 years — has drawn sharp criticism and a shiver of fear from a co-chairman of a coalition of military associations.

“As bad as this idea is — and it is very bad for today’s military — I can see a situation in which this proposal could be adopted,” said retired Navy Master Chief Petty Officer Joseph Barnes, the national executive director of the Fleet Reserve Association and a co-chairman of the Military Coalition, a group of more than 30 military-related organizations that share common concerns on most military personnel issues.

Barnes was referring to a proposal in the Jan. 31 final report of the Commission on the National Guard and Reserves which suggested the creation of a retirement system that would make some service members eligible for nondisability retired pay after just 10 years of service, but would make people wait until at least age 57 before drawing the pay unless they are willing to accept a greatly reduced annuity.

Looking to the future

Congressional aides said the idea could become popular as a cost-cutting move after combat operations in Afghanistan and Iraq end and the Pentagon has to tighten its budget belt.

“I don’t see this being approved this year, but I can foresee circumstances where there could be serious talk about overhauling military retired pay,” said a House aide, recalling that Congress approved a major cut in military retirement benefits at the end of the Cold War — only to reverse course years later when retention lagged.

“This is not to say it’s a wise idea,” said the House aide, who asked not to be identified. “But there are people who see military retirement, with its immediate annuity, as very generous at a time when pensions are disappearing in the private sector.”

Under the proposal, retired pay would begin at age 62 for those with 10 years of service, age 60 for those with 20 years, and age 57 for those with 30 years. Retirees could get paid sooner if they accept a 5 percent cut for each year of early payment.

Retired pay for active-duty members still would be based on average basic pay over the highest three earning years in uniform, at 2½ percentage points per year of service. As such, someone with 10 years of service would be eligible for retired pay equal to 25 percent of their average basic pay over their three highest-earning years, those with 20 years would receive 50 percent, and those with 30 years would receive 75 percent.

The report does not make clear whether payments would be adjusted for inflation between the time the service member retires and when payment begins. Details are left to Congress, which would have to approve any change. Failure to account for an increase in the cost of living would erode the value of retired pay by about 3 percent per year.

Recognizing that staying for 20 years to get retired pay is a large factor in career decisions, the commission proposes what it calls “gate pay” for remaining in the military beyond specific points. The pay, which the commission suggests could be a bonus equal to a year of basic pay, would be given at the discretion of the services, similar to current re-enlistment bonuses.

“So, we are cutting retired pay by making people wait longer before they can receive it, but then we have to pay bonuses to get people to stay,” Barnes said. “How does that make sense?”

Barnes said the result of the commission retirement plan would be that people with highly marketable skills, or those who work the hardest, would be likely to leave the military after 10 years, at an age when their earning potential in the private sector would be high.

“In some ways, this works directly against what the Department of Defense had been trying to do with a revised pay scale that encourages people to serve beyond 30 years,” he said.

Retired Air Force Col. Steve Strobridge, government relations director for the Military Officers Association of America and the other Military Coalition co-chairman, said he was “surprised” that a commission that was supposed to focus on the Guard and reserve looked at active-duty retired pay.

“We are concerned that some of the implications of that proposal haven’t been thought through adequately,” he said.

Without 20-year retirements, he suggested, the services would have more serious problems with personnel shortages today.

“If a person at the 10-year point has a choice between taking a share of their military retirement and leaving service, or continuing to serve under these arduous conditions until age 57 or 60 if they want to draw a military retirement check, there would be a lot more people leaving,” Strobridge said.

“Color us skeptical at this point,” he said of the commission plan.