Senate Armed Services Committee leaders say they are ready to move ahead on military retirement reform this year, following the lead of their House counterparts.
Committee chairman Sen. John McCain, R-Ariz., said he expects some version of a new 401(k)-style military retirement system to be included in his panel's draft of the annual defense authorization bill later this spring.
"We've been working closely" with the House, McCain said. "We're basing our plan on the recommendations of the (Military Compensation and Retirement Modernization) Commission, and we feel comfortable with that."
On Wednesday, House Armed Services Committee officials unveiled early drafts of their authorization bill proposal, including a dramatic overhaul of the 20-year, all-or-nothing current deal.
Both proposals still must survive full chamber debate and White House scrutiny before becoming law, but the dual-chamber support for the plan makes it increasingly likely that the military retirement system this year will see its biggest changes in decades.
That idea will draw praise from veterans groups clamoring for some career compensation for the estimated 83 percent of troops who leave the military before 20 years of service, the point at which they're eligible for retirement pay under the current system.
The new plan as drafted by the House committee and compensation commission would replace that with an automatic federal contribution of 1 percent of troops' basic pay to their Thrift Savings Plan account, plus additional matching contributions of up to 5 percent of basic pay.
Service members also would receive a lump-sum "continuation pay" if they stay beyond 12 years, and still would draw traditional retirement pay if they reach 20 years of service. However, the payout at 20 years of service would be reduced from the current 50 percent of active-duty pay to 40 percent, which has raised concerns among some outside advocates who worry about retention of senior military members.
The House committee will mark up its version of the plan next week, and the full chamber will vote on the proposal in mid-May.
Sen. Lindsey Graham, R-S.C., who chairs the Senate Armed Services Committee's personnel panel, said his panel's details on similar retirement changes have not yet been finalized, but he supports "the general idea of a blended plan in the future."
The new retirement rules would affect all troops enlisting after a new plan is put in place — October 2017, if the House proposal becomes law. Troops already in the ranks could opt into the new plan ot stick with the current "cliff vesting" system.
Both chambers also will include extensive new personal finance training for troops, to ensure they understand the benefits and risks of the new investment portfolios.