Obama deficit plan would re-examine military retirement

By Leo Shane III
Stars and Stripes
Published: September 19, 2011

WASHINGTON — Included in the president’s deficit reduction plan unveiled Monday are plans to re-examine the military retirement system, calling the current 20-year requirement “out of line with most other government or private retirement plans.”

The document calls for the creation of a commission similar to the controversial 2005 Base Realignment and Closure commission to look at broad reforms to the retirement system. In particular, it takes aim at the idea that troops must remain in the military for 20 years to receive any retirement benefits, giving “generous benefits to the relatively few members who stay.”

The move comes just weeks after officials from the Defense Business Board outlined similar plans to changing how military retirees are paid, abandoning the 20-year service target.

In that proposal, the board recommended a 401(k) style plan which would allow partial payout for troops who served as little as 10 years. Officials said the move was designed both to provide a more equitable distribution of retirement funds and save money long term.

But veterans groups blasted the proposal, in part because they believe changes would reduce the benefits for those currently on track to retire after 20 years or more.

The new White House plan notes that “any major military retirement reforms should include grandfathering provisions that ensure that the country does not break faith with military personnel now serving, including those serving in Afghanistan and Iraq.”

No action was taken on the Defense Business Board plan, and the new White House idea must be adopted by Congress before work would begin. Under the rules laid out by President Barack Obama on Monday, both the White House and Congress would have to approve the commission’s final report without changes before it could become law.

The White House did not specify how much changes in the military retirement system could save long term.

Obama’s deficit reduction plan also included $1 trillion in savings from troop withdrawals in Iraq and Afghanistan, and another $580 billion in cuts and fees in mandatory benefit programs.

That included almost $7 billion raised through a new $200 annual fee for veterans enrolled in the Tricare for Life program (but no new charge for active-duty troops) and more than $20 billion in new co-payment fees in prescription drug coverage for military families and retirees.

shanel@stripes.osd.mil

Twitter: @LeoShane