Big changes are probably coming soon to military pay and benefits, Defense Secretary Chuck Hagel told troops Wednesday.

That has been the drumbeat for months, and Hagel said he expects it to come to a head as a top political issue in the next few weeks when a commission impaneled by Congress releases the results of a massive two-year study.

"I think this will be as big an issue ... over the next year as there is, and it should be, because when you are talking about that entire compensation package for all of you and your families, I mean that is key," Hagel told several hundred sailors during a visit aboard the amphibious assault ship America, just off the coast of San Diego.

"I think this year will be the beginning with those commission recommendations of where we start moving forward on making some of these calls," Hagel said after a sailor asked him directly about the future of military retirement.

Hagel was referring to the Military Compensation and Retirement Modernization Commission, which Congress created in 2013 to study potential changes to military pay and benefits and make detailed recommendations for Capitol Hill to consider.

The commission's report is complete and will be released publicly by Feb. 1. It is likely to recommend significant changes to the 20-year cliff-vesting retirement pension that the military has offered for generations. Additional proposed changes to other aspects of military compensation also may be coming.

Hagel stressed the importance of grandfathering today's service members under the existing retirement system, which has been a key tenet of the commission's study: Only future troops would be forced to accept a new retirement system.

"This country cannot afford you all, each of you, being worried about your future retirement, your future benefits, your future pay," Hagel said. "We want you focused on your job."

Hagel is making a three-day trip across the country to speak directly with soldiers, sailors, airmen and Marines. After announcing his resignation in December, he is expected to leave office in February and said he wanted to make some final visits to thank the troops for their service.

Military compensation has became a high-profile target for cuts since Pentagon budgets stopped their steady wartime rise in 2010. These days, the overall defense budget is essentially flat, and the top brass says if per-troop personnel costs continue to grow, that could crowd out funding for weapons modernization and high-tech research.

"We cannot sustain the current trajectory that we are on with the current system we have," Hagel said. "We have opportunity here to make some shifts, some reforms, early on over a period of time, which assures that no one gets hurt on this. And the longer we defer it and not make these decisions on how do we come to grips with these realities, the more difficult it's going to be and in particular the more costly it's going to be, I think, for the men and women in uniform.

"We've got to address this. And we have to be honest about it. And we have to deal with it," Hagel said.

Scaling back troops' pay and benefits will be a careful balancing act, he said, because the military will need to offer a compensation package that is generous enough to continue to draw an educated and high-quality force.

"In the end, as advanced as our technologies are, as good as they will become, even better, without quality people, it won't matter. ... We are going to continue to keep and must prioritize a cycle of bringing good people, the best people, into this business."

He said the military health care system is also under review, with Pentagon officials asking many fundamental — and, Hagel added, "appropriate" — questions about its future as well.

"Should we have the system we have now? ... How better can we serve the men and women and the families who serve this country? Is there a cheaper way? A smarter way?" he said.

"We are reviewing everything. We are looking at everything. ... It's appropriate to review it right now when we are looking at all the components of your total compensation package."

About Andrew Tilghman

Andrew Tilghman is the executive editor for Military Times. He is a former Military Times Pentagon reporter and served as a Middle East correspondent for the Stars and Stripes. Before covering the military, he worked as a reporter for the Houston Chronicle in Texas, the Albany Times Union in New York and The Associated Press in Milwaukee.

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