Military Retirement Changes in the Hands of Congress
Proposed changes seen as a financial solution
A massive change that could affect a large number of troops is now in the hands of Leon Panetta. A sweeping new plan to overhaul the Pentagon’s retirement system would give some benefits to all troops and phase out the 20-year cliff vesting system that has defined military careers for generations.
There is currently a proposal in Congress which will eliminate the 20 year pension plan currently in place for military retirees. The proposal is to introduce a corporate style 401K in which 16.5% of a service member's base pay is deposited into a retirement plan. After serving a short time of 3 or so years, the service member is then entitled to the money penalty free after reaching the age of 65.
Currently, a service member is entitled to 50% of their base pay after serving 20 long years in our military. It is money that is paid to them after they retire and is paid for the duration of their lifetime. This is a kick in the face to all of those people currently serving in the military, especially those who have done over 10 years already, and now the government wants to take the hard earned money from those who have served the longest in order to put money in a retirement plan for people who are only in for a short period of time.
The traditions of paying service members of the same rank and experience identical base salaries may need to end, Gates said, as part of larger effort to control costs and better reward those whose skills are in highest demand according to a June report by the Virginian-Pilot.
The secretary has suggested that military salaries could be reduced, given that the services have consistently exceeded all recruitment and retention goals in recent years.
As you could imagine, this does not sit well with anyone in the military community. Surely there can be another way to lure service members to finish out their service to the 20 year retirement mark.