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Troop survey shows distrust of retirement reform proposal

Older troops largely reject changes; younger troops more receptive

Mar. 13, 2014 - 06:00AM   |  
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The Pentagon’s new proposal for reforming military retirement is drawing sharply negative reactions from today’s career-minded service members, according to a recent survey of Military Times active-duty readers.

By a margin of more than two to one, active-duty troops said they oppose the Defense Department’s proposal that would scale back the size of the lifetime monthly retirement payments promised to troops who serve 20 years or more.

That proposal, unveiled March 6, would compensate troops for the smaller pension by providing more cash-based benefits earlier in life, such as retention pay at 12 years lump-sum transition pay for those who leave with 20 years or more, and tax-free government contributions to retirement investment accounts for all troops starting at three years of service and fully vesting at six years.

Only about one in four active-duty troops thinks the underlying idea of offering more cash and smaller pension checks may have merit, according to a survey of 2,737active-duty troops who are on the Military Times subscriber list and were contacted individually by email.

A major concern among survey respondents is the issue of grandfathering current troops from any changes. The Pentagon’s proposal explicitly states that today’s troops could keep their current retirement package — and perhaps could opt into a new package if they chose. Only future recruits would have no say in the matter.

But many troops instinctively oppose retirement reform efforts because they simply don’t trust the Pentagon’s assurances about a grandfather clause.

“That is what they say, but I do not 100 percent believe that. We live in a moment now where I would say everything is uncertain in the military,” said an Air Force major in San Antonio who asked not to named.

Cynicism runs deep

The new proposal comes at a time of deep cynicism among troops about their military compensation. For more than a year, the top brass has repeatedly said today’s pay and benefits system is too costly and needs to be capped, and a number of proposals for rolling back various compensation programs has emerged from the Pentagon in recent months.

That distrust of Washington decision-makers was magnified in December, when lawmakers on Capitol Hill passed a law limiting annual cost-of-living adjustments in military retired pay for current retirees, which emerged as part of an 11th-hour deal on a governmentwide budget agreement.

The military community erupted in outrage, prompting Congress to repeal the law for current retirees several weeks later.

The Defense Department sent its new proposal for retirement reform to the Military Compensation and Retirement Modernization Commission, which is studying all compensation programs and is due to provide a final report to Congress early next year.

Army Staff Sgt. Jason Welch, who is a few months shy of his 20-year mark, said he opposes the plan, but acknowledged that some aspects could work well for a future generations of troops.

The prospect of a full military pension was “a big reason I decided to re-enlist 10 years ago,” Welch said in an interview after taking the survey. He said discussions about changing the current system make him nervous, regardless of assurances about grandfathering today’s force.

Yet he agreed with one aspect of the DoD plan that would allow active-duty troops to transfer into the reserves and still be eligible for some level of retirement pay immediately upon leaving service, rather than having to wait until age 60, as is now the case.

Welch said that would appeal to a lot of soldiers who are ready to move back into the civilian sector but who, under today’s system, are compelled to continue serving until the 20-year mark to lock in their active-duty retirement benefits.

“The soldiers I’ve worked with, a lot of them wouldn’t mind doing 15 years active and then five in the reserves. I think if they knew they could still get a pension, they would jump on that bandwagon,” Welch said.

A preference for cash?

DoD’s proposals are based on the belief that troops place a higher value on cash benefits earlier in life — for example, a large lump-sum transition payment for troops separating after 20 years of service — rather than steady pension checks in old age. Studies suggest changes based on that principle would allow DoD to reduce the total lifetime value of a military retirement package by about 10 percent without hurting retention.

But some service members question that assumption. One Navy commander who asked not to be named said many younger retirees would face real-world pressures to spend that money immediately after getting out, rather than investing it to supplement their retirement income later in life.

“Those ideas sound good on paper,” the commander said. “But if you give me $300,000 and you put me in a very poor job market, I am going to be spending that money not on my long-term retirement, but just trying to stay afloat. I would say that reduction of payments at the latter end [of life] is probably the wrong direction to move. That’s when people tend to have the least amount of income security.”

The Military Times readers survey was conducted from March 11 to March 13. Younger troops, including junior enlisted and junior officers who make up the majority of the force, are not proportionally represented among the respondents. As a result, the survey results are not intended to reflect a true cross-section of the entire force.

Older troops, for the most part, are far more skeptical of changing the retirement system than younger troops.

“Leave everything the way it is. The system is not broken — stop trying to fix it,” said one Army staff sergeant in his 16th year of service.

One Marine gunnery sergeant with 16 years in uniform said in his survey comments that today’s retirement package is not overly generous in the context of the full range of sacrifices that service members make.

“Our lifestyle is unlike any other career,” he said. “Our children and our spouses have to move every two to four years. Our spouses never get a good chance to make a career. Our children are ripped away from their friends when we move. Our bodies are worked strenuously through [physical training]. ... Our retirement should reflect what we’ve given our country over the past 20 years.”

Although the number of younger troops in the survey is somewhat limited, the results suggest they are more open to the possibilities being suggested by the Pentagon.

For Army Capt. Ben White, a 26-year-old West Point graduate who is unsure of whether he’ll stay in uniform for 20 years, the retirement issue is part of a larger debate about how the military is managed.

“To me, the 20-year cliff retirement is just a symptom,” White said. “It’s really a much bigger issue. A lot of the way we do things is based on a 1950s model ... a centrally planned, socialist economic model as opposed to the more free-market ways of doing things that are much more efficient.

“There needs to be a more competitive work environment. I think we should allow commanders to hire and fire people. Making rank and pay should be contingent on positions and responsibilities as opposed to [the Defense Officer Personnel Management Act] year-groups where, essentially, if you breathe, you get promoted at a certain point,” White said.

The readiness argument

Many troops are skeptical of the argument made by top Pentagon officials that reductions in compensation costs are needed to free up funding to pay for weapons modernization and high-tech research. About three in four troops surveyed said they disagree.

“Spending money on more sophisticated weapons is just a recipe for contractor greed,” one Army colonel commented in his response to the survey. “The fact is, we get our ass handed to us by some guy with an AK-47 or RPG in the back of a Toyota pick-up.”

In the end, for many of today’s troops, military service feels like a family business. And changing the retirement system might affect whether those family traditions carry on.

“We’ve already had that discussion in my family,” said the Air Force major in San Antonio, whose two grown sons are considering military careers.

“I’m like, ‘What I’ve been promised, and what my retirement is, may not be the package that you get if you go into the military.’ I think a lot of families are having those discussions. There is an awareness that that could change.”

Staff writer George Altman contributed to this report.

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