WASHINGTON — Proposed changes to retirement plans are generating much discussion, especially because some professionals, such as those in the Military Health System, often count on pensions to compensate for lower pay levels and other sacrifices throughout their careers.
Maj. Gen. George K. Anderson
A recent Congressional Research Service report, which examined several recent proposals, noted that “few military subjects have generated as much interest or commentary as the military retirement system.”
The CRS report pointed out that those who criticize the current military retirement program “generally find fault with the 20-year ‘cliff’ vesting, the generous retirement benefits to youthful beneficiaries, the overall cost of the system, the lack of force management flexibility, and the inefficiency of the system.”
On the other hand, the report pointed out that those who defend the current retirement system “argue that it is compensation for a career of arduous, and frequently hazardous, service and sacrifice for the nation and that it is relatively consistent with retirement systems for other high-risk occupations,” the report noted. “Others view the retirement annuity as a ‘retainer,’ since retired military personnel can be recalled to active duty at any time.”
This CRS report reviewed various reform proposals and presented potential options for Congress that included maintaining the current system or creating a national commission that could review military compensation, benefits and retirement.
Exactly what military retirement should be, especially in the current deficit-reduction environment, is a question being considered by academics, politicians, advocacy groups and government leaders. The answers could have a significant impact on how clinicians and other medical personnel are recruited and retained by the military.
“To me the retirement plan, from my perspective — and I served 30 years in the Air Force — was extremely important,” George Anderson, MD, a retired Air Force flight surgeon and executive director of the Association of Military Surgeons of the United States (AMSUS), told U.S. Medicine. “I doubt I would have stayed in if it had not been in place, because you are not making enough money to really build your own retirement plan along the way.”
Anderson, who is also a member of the Defense Health Board, said that what is important is that what is offered in the retirement plan is “balanced and attractive.”
“What is important here is trust,” he said. “That 25-year-old who is looking at a career in the military needs to be able to trust their government that it is going to offer a plan that will be secure for their foreseeable lifetime. That is pretty profound, but that is really what it is about.”Proposed Changes to Retirement Plans Could Strongly Impact Military Health System Cont.
In recent years, proposals for reforming the military retirement system have been brought forward by the Quadrennial Defense Review Independent Panel, the Debt Reduction Task Force and the National Commission on Fiscal Responsibility and Reform, DoD’s Defense Business Board and the Obama Administration.
The proposals put forward have ranged in breadth. For example, the Defense Business Board’s plan suggested eliminating the current retirement benefit and replacing it with a defined-contribution plan. This plan would vest after three to five years, instead of the current 20, and the plan would be payable at age 60 to 65 or the Social Security age. There would be no impact on the current military retiree population. The Quadrennial Defense Review Independent Panel, on the other hand, recommended a commision that would reform retirement benefits, as well as active, reserve and retired military healthcare.
In September, the Obama Administration jumped into the fray and said that the current military retirement system “was designed for a different era of work and is now out of line with most other government or private retirement plans.” The White House proposed a commission that would be established to review the military retirement system, working in a manner similar to the 2005 Base Realignment and Closure Commission.
Advocates Argue for Current System
Advocacy groups, however, do not see any of the current proposals for change as viable and argue that the current retirement program should stay in place.
“It has seen us through the last decade of war when we have imposed more sacrifices on military people than on any other time since the retirement system was invented. Our view is that, if we had not had the current retirement system, we would have almost certainly destroyed retention. If we didn’t have that strong pull until retirement, people would not have been willing to do their third and fourth and fifth combat tour,” said Air Force Col. Steven P. Stobridge, (ret.), director of government relations at the Military Officers Association of America.
The issue of retention is a particularly important issue for medical professionals, Stobridge told U.S. Medicine. “There is a shortage of medical professionals anywhere, and the military is no exception. We struggle to retain medical professionals in just about all fields and have to provide big incentive payments on top of the retirement system, but still the retirement system is the big stick for the long term.”
Legislators also have weighed in on the current proposals. At a House Armed Services Subcommittee hearing in the fall, Rep. Joe Wilson, (R-SC), called the Defense Business Board’s retirement plan “radical” and said it would result in “a significant reduction” of retirement benefits for all troops.
“The unveiling of the Defense Business Board proposal injected considerable uncertainty in the force,” he said of the plan.
Some legislators, meanwhile, questioned whether the retirement system should actually be expanded to cover more veterans.
Rep. Susan Davis, (D-CA), said, given that the current military retirement program “was established over 60 years ago,” it is “appropriate for to ask ourselves whether the current program still meets the requirements it was set up to achieve.”
Davis pointed out that some have expressed concern that “the current program does not recognize the sacrifices of those who have served during 10 years of conflict and may not stay the full 20 years to earn a retirement.”
“Is it fair that that person who may have been deployed once and stays until retirement is eligible for a lifetime benefit, while an individual who has multiple deployments and does not stay 20 years, and that person walks away with nothing more than the admiration of a grateful nation?” she asked.
Jo Ann Rooney, principal undersecretary of Defense for Personnel and Readiness, said at that hearing that “DoD is committed to conducting significant evaluation and in-depth analysis of any proposal” before proposing changes to the military retirement system
She added that DoD needs to ensure any proposed changes “do not break faith with current members” and “must also understand, to the fullest extent possible, the impact of any changes on the future of our all-volunteer force.”
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