Pentagon & Congress

Advocates spar over plans for retirement overhaul

Outside advocates on Wednesday offered Congress conflicting views on a proposed military retirement overhaul, leaving lawmakers with an even more muddled picture on how to move ahead on the idea.

Supporters of a 401(k)-style savings plan recommended by the Military Compensation and Retirement Modernization Commission told lawmakers on the House Armed Services Committee that moves to change the 20-year-or-nothing retirement system are long overdue, and should happen sooner rather than later.

"We have to change from this rigged system where there is an 83-percent chance they'll receive nothing for their service," said Brendon Gehrke, senior legislative associate for Veterans of Foreign Wars.

Opponents are arguing for more patience and study, worried that dramatic changes will hurt retention of talented troops or possibly jeopardize their future financial stability.

"The system now is extremely predictable," said Michael Hayden, director of government relations for the Military Officers Association of America. "You can see exactly what your retirement paycheck is going to be. With this proposal, your payouts depend on many different variables.

"Yes, it will be a more transportable [benefit], but you have to ask whether that will encourage more people to leave or stay."

The compensation commission — charged two years ago with looking at the military's long-term pay and benefits needs — has proposed dramatic changes for future enlistees, including government contributions to an investment account matching up to 5 percent of troops' base pay.

Provisions would allow troops who serve at least 12 years to see some bonuses and preserve some of the current 20-year retirement benefit, though all retirement payments would be scaled back by up to 20 percent.

Troops currently serving would see no changes to their retirement pay rules under the plan. Lawmakers have said they do not plan to force any changes on service members who have already signed contracts.

Hayden and representatives from the American Legion and National Military Family Association told lawmakers they have concerns about even modest changes, saying they could dramatically change the face of the force.

But Chris Neiweem, legislative associate for Iraq and Afghanistan Veterans of America, said Congress needs to do something to better repay troops who serve for less than 20 years, or else risk having them opt for civilian jobs with better long-term financial benefits — or never even enlist in the first place.

"We have a fundamental belief that it's unfair for someone to serve 10 years, maybe with five deployments, and leave with no retirement benefit at all," Neiweem said.

Gehrke noted that defense officials are looking to downsize the military, seriously jeopardizing some troops who may have planned to serve for 20 years. With a better safety net, those kinds of decisions may not have as dramatic a long-term financial impact, he said.

Lawmakers on the committee all said they believe retirement pay must be changed to give something to troops who leave the ranks after a decade or more of service. But they also offered differing opinions of the 401(k)-style proposal, voicing concerns about service members' financial literacy and force readiness.

Rep. Joe Heck, R-Nev., chairman of the committee's military personnel panel, promised a thorough review of all the commission's proposals, which include an overhaul of Tricare and commissary benefits as well.

But he offered no timeline for that work. For the last two months, the committee and most of the rest of Congress have been focused on the federal budget plans for fiscal 2016, and any major changes to military compensation are at least months away.

Gehrke said he's hopeful Congress can at least act on the retirement portions of the commission recommendations this year, noting that reports of a lower-than-expected pay raise for 2016 and cuts in defense funding have left many service members wondering if a long military career is worth the hardships

"Right now, many troops feel we're sending a message that we don't value their service," he said.

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