News article: DOD looking to alter military retirement plans, again

2/23/2016

The Department of Defense wants to reform its recently amended retirement plan.

The Department of Defense wants to reform its recently amended retirement plan, reported the Military Times. The agency on Feb. 9 set out its intentions in its 2017 budget request.

Changing military benefits
President Barack Obama in November signed into law legislation that fundamentally altered the military's retirement plan, reported The Associated Press. The $607 billion bill replaced the DOD's inflexible 20-year plan with a blended retirement system that includes pension and investment schemes, reported the Military Times. It also expanded specialized programs for personnel making the transition into life after service. Under this new system, which is set to start in 2018, four of every five servicemembers will leave the military with some sort of retirement plan.

According to The Washington Post, the DOD surveyed over 150,000 servicemembers and veterans before compiling the new plan. Defense Secretary Chuck Hagel thanked the nine-member panel for developing a modern retirement system that offers coverage to all military personnel.

"[The commissioners] have developed a wide-ranging set of recommendations on reforming and modernizing the package of benefits we provide to America's men and women in uniform and their families," the secretary said in a statement.

Changes coming
In its 2017 budget request, the DOD proposed a handful of changes to its blended retirement system. The agency plans to roll back its investment match policy and only offer full payment matches to personnel who have reached a five-year service threshold. Conversely, it will expand the match program for senior leadership. Currently, the DOD stops match payments for senior servicemembers who stay in 26 years or longer. The change will allow long-time officers to participate in the match program until they retire. The agency intends to up the federal cap on match contributions from 5 to 6 percent, as well.

The DOD's new retirement plan enacted in November included a mandatory minimum for continuation pay that applied to troops who stayed in for at least 12 years. It now plans to discard this system and institute a more personalized solution that resembles its traditional retention bonus system.

Adjustments drawing criticism
Some say the changes disproportionately favor older servicemembers intending to climb the ranks Others believe the DOD is degrading its new retirement system by putting budgetary concerns over personnel issues.

"Money is driving the attitude at the Department of Defense," Michael Higgins, a retired Air Force veteran and one of the nine committee members who developed the retirement plan passed in November, told the Military Times. "If you tinker with it, you are really going to change servicemembers perspective on this system. And if you do that, you put the system at risk."

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