[HEALTH.MIL] What A Deal: Work 20 Years, Get Lifetime Pension Pay; Still, Military Career Not For Everyone

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  • Date: Fri, 19 Aug 2011 11:01:08 -0500

What A Deal: Work 20 Years, Get Lifetime Pension Pay; Still, Military Career Not
For Everyone

By Associated Press, Updated: Friday, August 19, 2:53 AM

WASHINGTON - It sounds like a pretty good deal: Retire at age 38 after 20 years
of work and get a monthly pension of half your salary for the rest of your life.
All you have to do is join the military.

As the nation tightens its budget belt, the century-old military retirement
system has come under attack as unaffordable, unfair to some who serve and
overly generous compared with civilian benefits.

That very notion, laid out in a Pentagon-ordered study, sent a wave of fear and
anger through the ranks of current and retired military members when it was
reported in the news media this month.

If pensions are to be cut, Congress should go first, one person said on the

"Obviously, we're concerned about it," said retired Gen. Gordon Sullivan, an
Army chief of staff in the 1990s who heads the nonprofit educational group
Association of the United States Army.

The Defense Department put out a statement this week stressing that it was only
a proposal and no changes will be made anytime soon.

"While the military retirement system, as with all other compensation, is a fair
subject of review for effectiveness and efficiency, no changes to the current
retirement system have been approved," Eileen Lainez, a Pentagon spokeswoman,
said. "And no changes will be made without careful consideration for both the
current force and the future force."

The upset was sparked by a nonbinding recommendation from the Defense Business
Board, the Pentagon's private sector advisory panel. A July 21 draft report that
could be finalized this month recommended pensions be scrapped and replaced with
a 401(k)-type defined contribution plan.

The board members are from big businesses - experts, the Pentagon says, in
executive management, corporate governance, audit and finance, human resources,
economics, technology and health care.

Their report was strictly about dollars and cents, part of a review of Pentagon
spending started under Defense Secretary Leon Panetta's predecessor, Robert

It didn't mention intangibles: Would such a change make military jobs less
desirable? Is it possible to compare military and civilian employment? How much
does a grateful nation feel it owes to the less than 1 percent of the population
that volunteers to fight America's wars?

The report noted that military retirees start collecting pensions immediately
upon leaving the service, rather than at age 65. That's a benefit without peer
in the private sector, although there's a parallel in government. Some city
police departments start retirement payments immediately, for instance.

The report also said:

- Members of the military who retire before 20 years get nothing. Those who work
20 years get pensions worth 50 percent of their pay. That amount ramps up to
87.5 percent for 35 years of service.

- That means 83 percent of service members don't get a pension, even after
serving for 10 or 15 years, while 17 percent do get one.

- Though the job's risks are cited as a reason for keeping the 20-year system,
most troops who see combat don't stay that long.

- Low-cost health care premiums for retirees on top of pensions make total
retirement benefits "significantly more generous than civilian programs" and
more expensive.

- The program's costs are "rising at an alarming rate" and "future liability
will grow from $1.3 trillion to $2.7 trillion" by 2034.

The report recommended a new mandatory savings system for all personnel but with
the government making contributions comparable to the highest level of civilian
plans. There'd be an option for individuals to contribute too; payments wouldn't
start until age 60 to 65. Pentagon contributions would be larger for those who
had family separations and other unusual duty and double for years spent in a
combat zone. The report said there would be no impact on existing retirees or
fully disabled vets.

The current system hasn't been changed materially in more than 100 years. It was
designed when people didn't live as long, second careers were rare and military
pay was not competitive with civilian pay, the report said. It said skills used
by soldiers, sailors, airmen and Marines are now transferable to the civilian
world and that many people find second careers after retiring in their 40s.

That means they collect the pension as well as income from second careers.

Sullivan dismissed the idea that the average military retiree becomes enriched
by the system, saying few go to work for big defense contractors or find other
high-paying jobs. More commonly, a retiree might get about $1,400 monthly in
pension pay and a second career that earns $50,000 or $60,000 annually, he said.

But holding change at bay may not be possible. Officials have said that finding
savings in personnel costs like health care and pensions is a possibility.
Everything is on the table as the department looks for some $350 billion in
savings called for in recent legislation to decrease the national debt.

"It's the kind of thing you have to consider," Panetta said this week, adding
any change must be done in a way that doesn't break faith with the men and women
in uniform.

Such benefits were once sacrosanct - part of the bargain the nation makes with
those who put their lives on the line to protect it. Many opposed to any change
cite the profound sacrifices troops and their families have made over the past
decade, with repeated tours of duty, a crisis of ballooning military suicides
and hundreds of thousands of cases of mental health problems, just to mention a
few effects of war.

"If we want an all-volunteer force, the bottom line is that we're going to have
to take care of these people who were willing to do what the bulk of people
weren't willing to do," Sullivan said. "Going to war is dangerous - you can get
killed doing it. And the question is, Are the American people willing to
recognize the sacrifices of these young people?"

Money for troops has flown freely from Congress with the tacit support of
taxpayers over the decade, when pay was raised, as the report notes, to "higher
than that of average civilians with the same education."

There was no public pushback against special recruiting bonuses, the GI Bill for
college tuition and expenses for health care and other needs of troops and their

The question now is whether the depth of support widely expressed for the troops
will be tested by the different times. U.S. financial woes are at center stage
as the wars in Iraq and Afghanistan wind down. Pensions are becoming a thing of
the past; more risky market-whipped 401(k) programs are the civilian norm.

Will taxpayers want to continue for troops the special and costly programs that
they themselves are losing?

Says Sullivan: "Maybe. Maybe not."


NOTE:  If you want to contact your elected officials about any of the comments
contained in the above article, please visit

SOURCE:  Army Stand-To! Newsletter, 19 August 2011

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