Tuesday, March 07, 2006
No More 20-year Retirement?
Classification: UNCLASSIFIED
Caveats: NONE
Subject: USMA 1960-forum: FW: No More 20-year Retirement?
Just picked this up on the AOG info sheet - LOOKS like we got out early enough
Some of those thinking about the SERVICE may be swayed out of it
--------------------
No More 20-year Retirement?
The Pentagon's Defense Advisory Committee on Military Compensation (DACMC) used its final public hearing on Feb. 28 to announce preliminary recommendations for sweeping changes to the military compensation system.
The DACMC is supporting a complete revamping of the current military retirement system. The committee's view is that the current 20-year "cliff-vested" system is outdated, overly "generous," inflexible, and inequitable (with no retirement eligibility before 20 years and no incentive to serve beyond 30 years).
DACMC's recommended changes (most of which DACMC envisions as applying only to future service entrants) include:
* Eliminating the immediate annuity upon retirement and delaying payment until age 60
* Providing additional retired pay credit (and basic pay increases) through 40 years of service
* Initiating government contributions to a Thrift Savings Plan or 401K-like plan of 5 to 10% of basic pay
* Vesting of members between 5 years and 10 years of service
* Creating a "gate pay" system to provide lump sum payment incentives at specific points of service
* Vesting in retirement health care benefit at completion of 20 years of service
* Raising single housing allowances to the "with dependents" rates
Although the committee's recommended changes wouldn't be imposed on the current force, the DACMC proposes offering current members the option of participating in the new retirement system.
Under Secretary of Defense David Chu has indicated the DACMC's recommendations will be turned over to the Tenth Quadrennial Review of Military Compensation (QRMC), which is due to convene shortly. Chu has said he plans to send Congress at least one of the DACMC's recommendations separately - extending the pay table to 40 years of service.
MOAA's perspective is that most of these proposals have been reviewed or recommended by any number of military compensation reform panels over the last 40 years. The practical reality is that proposals to apply civilian-style retirement systems to the military haven't been adopted or haven't worked because military service conditions are so much more severe than civilian working conditions.
The 20-year retirement (and 20-year vesting) system was enacted in the belief that there has to be a significant "carrot" to draw highly capable people to serve for at least two decades under conditions that most Americans want to avoid even for a short time. Conditions like the present high-deployment environment sometimes put that system to a severe test.
Congress previously changed the law in 1986 to reduce 20-year retired pay for new entrants in 1986 (that also was touted as "encouraging longer service"). But the change had to be repealed in 1999 after the Joint Chiefs of Staff complained it was hurting retention.
If today's 10-year servicemembers facing a third Iraq deployment were under the DACMC-proposed system, they would be mulling between (a) separating and taking a significant chunk of their retirement with them or (b) waiting until age 60 to get an annuity if they continued serving.
We suspect that situation would generate some ugly retention figures. We'll be very interested to see what the QRMC does with this recommendation.
Caveats: NONE
Subject: USMA 1960-forum: FW: No More 20-year Retirement?
Just picked this up on the AOG info sheet - LOOKS like we got out early enough
Some of those thinking about the SERVICE may be swayed out of it
--------------------
No More 20-year Retirement?
The Pentagon's Defense Advisory Committee on Military Compensation (DACMC) used its final public hearing on Feb. 28 to announce preliminary recommendations for sweeping changes to the military compensation system.
The DACMC is supporting a complete revamping of the current military retirement system. The committee's view is that the current 20-year "cliff-vested" system is outdated, overly "generous," inflexible, and inequitable (with no retirement eligibility before 20 years and no incentive to serve beyond 30 years).
DACMC's recommended changes (most of which DACMC envisions as applying only to future service entrants) include:
* Eliminating the immediate annuity upon retirement and delaying payment until age 60
* Providing additional retired pay credit (and basic pay increases) through 40 years of service
* Initiating government contributions to a Thrift Savings Plan or 401K-like plan of 5 to 10% of basic pay
* Vesting of members between 5 years and 10 years of service
* Creating a "gate pay" system to provide lump sum payment incentives at specific points of service
* Vesting in retirement health care benefit at completion of 20 years of service
* Raising single housing allowances to the "with dependents" rates
Although the committee's recommended changes wouldn't be imposed on the current force, the DACMC proposes offering current members the option of participating in the new retirement system.
Under Secretary of Defense David Chu has indicated the DACMC's recommendations will be turned over to the Tenth Quadrennial Review of Military Compensation (QRMC), which is due to convene shortly. Chu has said he plans to send Congress at least one of the DACMC's recommendations separately - extending the pay table to 40 years of service.
MOAA's perspective is that most of these proposals have been reviewed or recommended by any number of military compensation reform panels over the last 40 years. The practical reality is that proposals to apply civilian-style retirement systems to the military haven't been adopted or haven't worked because military service conditions are so much more severe than civilian working conditions.
The 20-year retirement (and 20-year vesting) system was enacted in the belief that there has to be a significant "carrot" to draw highly capable people to serve for at least two decades under conditions that most Americans want to avoid even for a short time. Conditions like the present high-deployment environment sometimes put that system to a severe test.
Congress previously changed the law in 1986 to reduce 20-year retired pay for new entrants in 1986 (that also was touted as "encouraging longer service"). But the change had to be repealed in 1999 after the Joint Chiefs of Staff complained it was hurting retention.
If today's 10-year servicemembers facing a third Iraq deployment were under the DACMC-proposed system, they would be mulling between (a) separating and taking a significant chunk of their retirement with them or (b) waiting until age 60 to get an annuity if they continued serving.
We suspect that situation would generate some ugly retention figures. We'll be very interested to see what the QRMC does with this recommendation.
While I'm certain this will draw some fire...I'll have to say that our military's making the most they've made, EVER!
Every time I turn around, there seems to be some sort of new scheme to figure out how to recruit or retain our current force. While I agree they're the most capable military force in the world...they sure don't act like it unless you're going to dangle some sort of carrot in front of them in order to perform. While this is a shotgun blast, certainly not intended to point a finger of blame at all that serve or who have served BUT, let's be realistic about something. The job that the military performs hasn't really changed since WWII. Why should we be forced to pay for all the perks and bennies that are now on the table when we can just fire up the draft and pull in the folks we need in the numbers that we need them.
That's it, the draft is the elephant in the room that everyone seems NOT to want to talk about.
The reason the wonks inside the 5-sided puzzle palace (the Pentagon for you in Rio Lindo) are proposing this is because we're flat out running out of money!
When the country was at peace OR there was a war on with a draft in place, military service was something that you either faced or ran from. But during your enlistment, you'd be housed, trained, clothed, fed, and armed. That was about it. No family benefits...no housing other than your bunk, footlocker and wall locker...three squares in the chow hall. Still, we somehow got the job done.
If it ain't broke, don't fix it.
But what if it used to work, you improved it...but now it's broke again...do you try to fix it?
Money isn't going to be the longterm fix to shortages of personnel in uniform. Either changing the mindset of the "me" generations to a more useful mindset OR simply hauling kids in via the draft. We have to get the job done...
See you on the high ground.
MajorDad1984
P.S. Before you start throwing rocks, I've been there, done that, got a Bronze Star for doing it. I've done my time...and now I'm almost 44. Perhaps it's time for some kids from my children's generation to step up to the plate and take a swing at the apple....
P.S.S. Yes, I have a son currently heading back from Iraq on his "mid-tour" leave...so yes, I guess I do support my son serving his country like his family before him. I just hope and pray that he comes back a whole person. However, him standing his watch on the wall...ensures that you'll be waking up with all your limbs tomorrow morning!
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Every time I turn around, there seems to be some sort of new scheme to figure out how to recruit or retain our current force. While I agree they're the most capable military force in the world...they sure don't act like it unless you're going to dangle some sort of carrot in front of them in order to perform. While this is a shotgun blast, certainly not intended to point a finger of blame at all that serve or who have served BUT, let's be realistic about something. The job that the military performs hasn't really changed since WWII. Why should we be forced to pay for all the perks and bennies that are now on the table when we can just fire up the draft and pull in the folks we need in the numbers that we need them.
That's it, the draft is the elephant in the room that everyone seems NOT to want to talk about.
The reason the wonks inside the 5-sided puzzle palace (the Pentagon for you in Rio Lindo) are proposing this is because we're flat out running out of money!
When the country was at peace OR there was a war on with a draft in place, military service was something that you either faced or ran from. But during your enlistment, you'd be housed, trained, clothed, fed, and armed. That was about it. No family benefits...no housing other than your bunk, footlocker and wall locker...three squares in the chow hall. Still, we somehow got the job done.
If it ain't broke, don't fix it.
But what if it used to work, you improved it...but now it's broke again...do you try to fix it?
Money isn't going to be the longterm fix to shortages of personnel in uniform. Either changing the mindset of the "me" generations to a more useful mindset OR simply hauling kids in via the draft. We have to get the job done...
See you on the high ground.
MajorDad1984
P.S. Before you start throwing rocks, I've been there, done that, got a Bronze Star for doing it. I've done my time...and now I'm almost 44. Perhaps it's time for some kids from my children's generation to step up to the plate and take a swing at the apple....
P.S.S. Yes, I have a son currently heading back from Iraq on his "mid-tour" leave...so yes, I guess I do support my son serving his country like his family before him. I just hope and pray that he comes back a whole person. However, him standing his watch on the wall...ensures that you'll be waking up with all your limbs tomorrow morning!
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