It’s a time honored tradition as old as any in the United States military; a perk rarely found anywhere else. And if some in the government have their way it could become a thing of the past.
The notion that someone who decides to serve in the US armed forces for more than 20 years and receive a pension for life is one that has been so ingrained into the system that it’s a given. When a person decided to join they knew that if they served for 20 years they would be entitled to an immediate pension.
During the bright economic times in America and even in the lean times, the military retirement system was a sacred idea that was never even considered for a drastic overhaul.
That is changing however. Earlier this year the Defense Business Board put forth the idea that the military should replace the current retirement system with a 401K program that pays benefits after turning 60 to 65. The savings according to the board would amount to some $250 billion over 20 years.
The change to the system would be the most drastic ever considered for the 100 year old military retirement plan.
“You’ve got to put everything on the table,” Defense Secretary Leon Panetta said. “You can’t approach a (federal) deficit the size we’re dealing with and expect that you’re only going to be dealing with it at the margins. You’ve got to look at everything.”
For anyone not familiar with the military retirement system or who have never served, $250 billion is a figure that can’t be ignored.
The Defense Business Board said the current system can’t continue forever. Costs will grow from a current cost of $1.3 trillion, of which only $385 billion is funded, to $2.7trillion by 2034. The situation “will seriously erode future military capabilities,” a statement by the advisory panel said.
On the heels of that report comes President Obama’s newly unveiled deficit-reduction plan. While most of the attention has focused on the targeting of the wealthiest Americans with new taxes, the plan also calls for the overhaul of the military retirement system.
The plan calls for reexamining the retirement system that “provides generous benefits to the relatively few members who stay at least 20 years and no benefits for the roughly 80 percent of service members who stay less than 20 years.”
According to the wording in the plan, the system “was designed for a different era of work, and is now out of line with most other government or private retirement plans.”
The plan calls for a commission to be established to review the system the way the 2005 Base Realignment and Closure Commissions (BRAC) worked. The Pentagon would make recommendations to the commission, which could then make changes to them. The commission would then send the proposals to the president, who would decide whether to forward them to Congress. Congress would get to decide whether to approve or reject the recommendations but may not offer any changes.
“The administration believes that any major military retirement reforms should include grandfathering provisions that ensure that the country does not break faith with military personnel now serving, including those serving in Afghanistan and Iraq,” the plan says.
The proposal is part of an overall plan to slash federal deficits by more than $3 trillion.
While many who joined the military and were attracted to stay in part for the 20 year retirement system currently in place might be shaking in their boots, the ‘not break faith with military personnel now serving’ wording should give some comfort.
While the argument that few professions are more dangerous than a career in the military and thus a unique retirement system is needed is a valid one, as long as those who signed up under the retirement plan now in place don’t see that taken away, the system has to be looked at.
Just as the old traditions sometimes fall by the wayside, maybe for new recruits the old 20 year system will become a thing of the past. As long as those of us who served 20 years (23 in my case) and those serving now don’t see the promises that were made to us broken, then the once sacred idea should be open for discussion. It could prove to be yet another example of those who serve doing their part to keep America and its economy the strongest on earth.