MOAA On Top of Retirement Reform
Aug 05 2011
There is a great article at MOAA’s website titled, “Military Retirement Reform: Who’d Lose What?”
This is an important topic that all members should read given the deficit-reduction proposals coming out of Congress. As the article states, the impact to military members could come from:
- freezing military pay raises and/or reduce military manpower levels
- dramatically reducing the military retirement package
- significantly increasing out-of-pocket healthcare expenses for retirees
The retirement issue perplexes me. It seems that in order to save money the powers-that-be want to cut back the military pension system and make it more like a civilian workforce plan – along the lines of a 401(K) with vested member retirees getting their money at age 60.
So, if the argument is to corporatize the military retirement plan, why is there is no mention of employer provided matching contributions (i.e., for every dollar the member contributes, the employer will contribute a dollar)? These contributions are prevalent in civilian 401(k) programs.
More importantly, serving in the military is not similar to a civilian job – for instance, retired civilians aren’t subject to recall as retired military members are. Therefore, if the job factors are dissimilar, why should the retirement packages be similar?
I do wonder how these types of changes will impact retention and recruiting. As MOAA points out, we’ve been through this before:
“After Congress passed a far less dramatic retirement cut in 1986, it had to be repealed less than 10 years later when the Joint Chiefs of Staff complained it was undermining retention. Can we seriously expect that wouldn’t happen with the QRMC’s far more dramatic cut?”
With the new plan, the carrot of having to stay 20 years to get the retirement pay will be gone. Why will good employees stick around with civilian pay rates enticing them. The current retirement system is what kept my wife in. I’m curious among MOAA readers who are retired:
Would you have stayed in at 10, 11, or 12 years if the retirement plan was the proposed program?
On an ending note, it is ironic that Representatives in Congress who get 100% pension after only 8 years of service are reducing the military retirement program. Maybe it’s time for military members to unionize!
I would not have stayed if the retirement plan was the proposed program. It has been so reassuring knowing that I have a steady income that we can live off of and I only have to work if I want to. As you know last year my husband was seriously ill. I was able to dedicate my days to caring for him and not have to worry about juggling work with being with him. Also the health insurance benefits are outstanding. His bills were approximately $400,000 between hospitalization and rehab. Our portion was about $700. We would not have been able to afford his care without Tricare or my retirement pay. At the time we also had two children in college and one graduated this year without any college loans!
Brenda – thanks for the post. Based on the parameters of the new plan, I see a lot of people leaving after 10 years, especially pilots and docs who can make a lot more on the outside. The people who stay in will be the ones who can’t get offered a job on the outside, so who knows what the makeup will be like. I would love to know the thinking of the people who put together the plan.