Are military pensions too 'generous'?

PAULINE JELINEK, Associated Press

Friday, August 19, 2011

WASHINGTON (AP) — It sounds like a pretty good deal: Retire at age 38 after 20 years of work and get a monthly pension of half your salary for the rest of your life. All you have to do is join the military.

As the nation tightens its budget belt, the century-old military retirement system has come under attack as unaffordable, unfair to some who serve and overly generous compared with civilian benefits.

That very notion, laid out in a Pentagon-ordered study, sent a wave of fear and anger through the ranks of current and retired military members when it was reported in the news media this month.

If pensions are to be cut, Congress should go first, one person said on the Internet.

"Obviously, we're concerned about it," said retired Gen. Gordon Sullivan, an Army chief of staff in the 1990s who heads the nonprofit educational group Association of the United States Army.

The Defense Department put out a statement this week stressing that it was only a proposal and no changes will be made anytime soon.

"While the military retirement system, as with all other compensation, is a fair subject of review for effectiveness and efficiency, no changes to the current retirement system have been approved," Eileen Lainez, a Pentagon spokeswoman, said. "And no changes will be made without careful consideration for both the current force and the future force."

The upset was sparked by a nonbinding recommendation from the Defense Business Board, the Pentagon's private sector advisory panel. A July 21 draft report that could be finalized this month recommended pensions be scrapped and replaced with a 401(k)-type defined contribution plan.

The board members are from big businesses — experts, the Pentagon says, in executive management, corporate governance, audit and finance, human resources, economics, technology and health care.

Their report was strictly about dollars and cents, part of a review of Pentagon spending started under Defense Secretary Leon Panetta's predecessor, Robert Gates.

It didn't mention intangibles: Would such a change make military jobs less desirable? Is it possible to compare military and civilian employment? How much does a grateful nation feel it owes to the less than 1 percent of the population that volunteers to fight America's wars?

The report noted that military retirees start collecting pensions immediately upon leaving the service, rather than at age 65. That's a benefit without peer in the private sector, although there's a parallel in government. Some city police departments start retirement payments immediately, for instance.

The report also said:

—Members of the military who retire before 20 years get nothing. Those who work 20 years get pensions worth 50 percent of their pay. That amount ramps up to 87.5 percent for 35 years of service.

—That means 83 percent of service members don't get a pension, even after serving for 10 or 15 years, while 17 percent do get one.

—Though the job's risks are cited as a reason for keeping the 20-year system, most troops who see combat don't stay that long.

—Low-cost health care premiums for retirees on top of pensions make total retirement benefits "significantly more generous than civilian programs" and more expensive.

—The program's costs are "rising at an alarming rate" and "future liability will grow from $1.3 trillion to $2.7 trillion" by 2034.

The report recommended a new mandatory savings system for all personnel but with the government making contributions comparable to the highest level of civilian plans. There'd be an option for individuals to contribute too; payments wouldn't start until age 60 to 65. Pentagon contributions would be larger for those who had family separations and other unusual duty and double for years spent in a combat zone. The report said there would be no impact on existing retirees or fully disabled vets.

The current system hasn't been changed materially in more than 100 years. It was designed when people didn't live as long, second careers were rare and military pay was not competitive with civilian pay, the report said. It said skills used by soldiers, sailors, airmen and Marines are now transferable to the civilian world and that many people find second careers after retiring in their 40s.

That means they collect the pension as well as income from second careers.

Sullivan dismissed the idea that the average military retiree becomes enriched by the system, saying few go to work for big defense contractors or find other high-paying jobs. More commonly, a retiree might get about $1,400 monthly in pension pay and a second career that earns $50,000 or $60,000 annually, he said.

But holding change at bay may not be possible. Officials have said that finding savings in personnel costs like health care and pensions is a possibility. Everything is on the table as the department looks for some $350 billion in savings called for in recent legislation to decrease the national debt.

"It's the kind of thing you have to consider," Panetta said this week, adding any change must be done in a way that doesn't break faith with the men and women in uniform.

Such benefits were once sacrosanct — part of the bargain the nation makes with those who put their lives on the line to protect it. Many opposed to any change cite the profound sacrifices troops and their families have made over the past decade, with repeated tours of duty, a crisis of ballooning military suicides and hundreds of thousands of cases of mental health problems, just to mention a few effects of war.

"If we want an all-volunteer force, the bottom line is that we're going to have to take care of these people who were willing to do what the bulk of people weren't willing to do," Sullivan said. "Going to war is dangerous — you can get killed doing it. And the question is, Are the American people willing to recognize the sacrifices of these young people?"

Money for troops has flown freely from Congress with the tacit support of taxpayers over the decade, when pay was raised, as the report notes, to "higher than that of average civilians with the same education."

There was no public pushback against special recruiting bonuses, the GI Bill for college tuition and expenses for health care and other needs of troops and their families.

The question now is whether the depth of support widely expressed for the troops will be tested by the different times. U.S. financial woes are at center stage as the wars in Iraq and Afghanistan wind down. Pensions are becoming a thing of the past; more risky market-whipped 401(k) programs are the civilian norm.

Will taxpayers want to continue for troops the special and costly programs that they themselves are losing?

Says Sullivan: "Maybe. Maybe not."

More like this story

spelchek 1 year, 9 months ago

No.

3blindmice 1 year, 9 months ago

we will cut social security, we will cut medicaid, we will stop building roads and start privatizing them, we will cut the pensions for veterans, we will close schools, but by god we will never raises taxes on the top 1% that never pay more than 15% in taxes and own 98% of everything in this country.

3blindmice 1 year, 9 months ago

i could try to explain all the tricks that the top 400 earners in the us use to avoid paying taxes but you wouldn't understand it. I'll just leave this link for you. nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=2

if you go to youtube you can learn even more of their tricks such as holding certain stocks for as little as 10 minutes to be able to claim the 15% tax rate.

JCLifer 1 year, 9 months ago

According to the IRS, in 2008:

"the top 5 percent of wage earners pay 58.7 percent of taxes; the top 10 percent of wage earners pay 69.9 percent of taxes; the top 50 percent of wage earners pay 97.3 percent of federal income taxes and; the bottom 50 percent of wage earners pay 2.7 percent of income taxes."

"The wealthiest 2 percent, about 3.8 million filers had adjusted gross incomes above $200,000 and that’s about 7 percent of all returns. These individuals paid about $522 billion in income taxes or about 62 percent of all federal receipts."

3blindmice 1 year, 9 months ago

you seem to have left out payroll taxes. hmmm wonder why?

m2thadsr 1 year, 9 months ago

@3blindmice 100% agree with you. It can't be that hard to keep when the article said less than 1% of the population joins the military and only 17% of that 1% stays in for 20 years.

smc85 1 year, 9 months ago

I had a nice response typed out, but it disappeared from my screen and quite frankly I don't feel like re-typing it. People like you, selfish and unappreciative, do not deserve the time of day. People have fought and died for this country and the freedoms that remain and all you can do is whine about how a price can actually be put on their sacrifices. You have NO IDEA what it is like to be a service member or the spouse at home. If you did, your tune would be different.

smc85 1 year, 9 months ago

You have got to be kidding. "Too generous" for people who were willing to go to war to protect your freedoms, liberties, and defend this great country? People who left for months on end, risking their lives in war, missing their child's birth, loosing limbs, or struggling with PTSD all because they were willing to be the one to fight. My husband and many of our friends have risked their lives in combat for your freedom to run your mouth and come October i will go to marine corps boot camp with the hope of having my chance to also serve and defend overseas. Spend a day in a soldier/sailer/marine/air man's boots in Afghanistan or the day being the spouse waiting at home for their return. THEN tell me how you feel. These great men and women deserve so much more for what they do.

smc85 1 year, 9 months ago

@graceful: I guess the freedom of speech you used to voice your opinion is a "facade" too isn't it? Service men and women have been fighting for your rights since before you were born and will be long after your gone. How can you say that the people who ensure you the liberties you enjoy every day (weather you call it freedom or not) do not deserve a good retirement?? And before you speak perhaps you should do some research into the topic you wanna talk about, at 20 years a service member is eligible for 50% of HALF of the base pay of that members current rank. So basically retirement is 25% of only the base pay, no housing allowances, grocery rations allowances, or any other perks. As far as it being an unwise financial decision to pay retirement to military members, that's the most ridiculous idea for cutting government spending ever. We could cut welfare in half and increase the standards to receive disability and achieve the same goal while forcing thousands of lazy people to give back to society. Should firemen, police officers, sheriffs deputies and other public service employees also not receive retirement? Leave the military alone and let us do our thing, cause with out us you wouldn't even be able to have posted this uninformed, poorly thought out little retort -Corporal Jonathan Cecil United States Marine Corps

Gabrielle 1 year, 9 months ago

Oh Grace! Everytime I want to stand beside you on a point - you say something totally ridiculous! Please stop it - there are things that you say that actually make sense to me. There are times I wouldl ike to clarify when I see things have gone aray(?). I can only roll my eyes!!

Having said that, I am going to do my best to delineate things here. As far as I can tell, there are two things being spoken about here.

Military personnel having EARNED pensions b/c they worked very hard in very unpleasant conditions with little pay - including all the allowances - some families are actually eligible for food stamps - hey and nothing about how they shouldn't have kids! Separate issue. Except for a few military jobs, the work does not compare to any civilian job.
From a STRICTLY financial perspective - the dilemma warrants creativity to give our hard working dedicated military personnel the earned pensions and/or disability.

Does that make sense? I hope so. Lets think about how to make it work,...at least I would like that - don't want/need to leave it to 'Washington' - if you know what I mean!

I feel awkward saying this: Does it count if I am former military, my father was military, my children were/are military, their other grandfather was military, my son-in-law is learning to fly military aircraft? Oh, and two brothers are former military, and a former brother-in-law...... and that's all I can think of at this time. WOW! Never really looked at it all like that - I knew there were military people in the family - just didn't see the obvious!!! LOL!

muleman 1 year, 9 months ago

Politicians can serve less time and draw more retirement

Gabrielle 1 year, 9 months ago

OUCH! And their work is alot easier than military. Something needs to be done with that!!

stiefert 1 year, 9 months ago

I saw the power point of the panel's recommendation and it cited the fact that people are living longer. I am curious to see if they looked at the life span of the population as a whole, or the life span of combat vets/military retirees who have been exposed to harsh conditions, physical hardship for 20+ years and the myriad of unhealthy substances you are exposed to in combat zones and 3rd world countries.

Gabrielle 1 year, 9 months ago

Thanks, AMAZED2, for your service. I don't know how you and others did 20 years! Blessings to you, rodinman, smc85. Are there others to be included?

rodinman 1 year, 9 months ago

graceful, What should the military retirement program be? You criticized the current system as being too generous; I'd like hear your specifics. As for me, I'm retired , spent 4 years in combat, another 4 years at isolated, remote assignments (no family, limited tv, random if any phone calls home and 12 to 14 hour work days, 6 days a week (no overtime). Nine operations and looking at at least 2 more. What did I not earn?

Gabrielle 1 year, 9 months ago

Rodinman - first, I appreciate your service and dedication. With all sincerity, what do you think of your pension? I presume your medical care is through the VA - what are your thoughts of the medical care you recieve? I appreciate hearing your pros, cons and suggestions for improvement. Sure, I've heard what has been in the news - I would like to hear from you - your personal experience.

rodinman 1 year, 9 months ago

My pension is adequate, not going to get rich and must budget carefully. I am very satisfied with the medical care I have received through the VA system. The VA medical care system is not flawless, but I have encountered dedicated professionals working hard to provide the best care possible. I've had doctors call me on the weekends to discuss on going care and upcoming examinations.

Gabrielle 1 year, 9 months ago

Its reassuring to know we have dedicated medical professionals going above and beyond by calling you on weekends. is it an accurate statement to say the VA medical care system is not flawless b/c of its enormous size and once one learns to navigate 'the sytem' it becomes doable?

muleman 1 year, 9 months ago

Not everyone that serves 20 years in the military is healthy enough to work another job after retiring. Remember "agent orange" ?

Gabrielle 1 year, 9 months ago

yes. I am also familar with sailors who worked on ships. People knew back then about asbestos and its harmful affects. I don't know enough about it, though, to know if it was total negligience on the part of our government that some sailors have mesothelioma or if there are other factors that come into play. One thing for sure - there is no confusion about agent orange. The thing is - as I understand it - exposure to agent orange may qualify one for disability which may be less than a pension....actually probably is less than a pension.

3bunnies 1 year, 9 months ago

agent orange is a chemical herbicide. Not Abestos.

Gabrielle 1 year, 9 months ago

That's correct. They are two different things.

3blindmice 1 year, 9 months ago

agent orange is a defoliant. used extensively in vietnam to kill the greenery. it is still being used to this day on cotton despite it being a known carcinogen. they just changed it by one molecule more or less. a brief exposure leaves one feeling horrible I cant imagine being doused repeatedly by it.

PatRoweKerr 1 year, 9 months ago

Thank you to the military - Veterans, past, present and future - and to their families - for their serivice....before I wrote this I was looking for the stats I had on retirements of our President, Vice President, Congressionals, etc -- life-time retirement. Deductions in military retirement should be the last consideration; with the first starting at the top.....when elected officials - state or federal - say they can't do anything about 'their' salaries or pensions because they're legislated or constitutional, whichever, they can always donate a significant portion to organizations that support the many citizenry who could use those resources. And while there are inherent danger risks in many professions, they do not compare in any way to what our military, police officers face -- as a Mom, Daughter, Granddaughter, etc. of someone who has deployed in every branch -- and having a loved one deployed nearly every day since 2003 - there is not a prayer said at our home that does not include prayer for the safety of our service members and their families. So please, folks, let's not tap in to the pensions of those willing to stand for our safety; our hearts and minds will never face what they have witnessed in their deployments. Take a moment to read the View in today's paper and remember, but for the Grace of God, go I. Blessings, Pat PS Make your view known to those in office in DC!

JCLifer 1 year, 9 months ago

Pensions are part of the cost. Consider Tri-Care. the health care plan for over 2.2 million military retirees that is totally separate and on top of the VA hospital system: The monthly premium is only $39. There is no co-pay for medical services or supplies. We taxpayers are paying $53 billion a year for this super-duper ultra Cadillac plan. Perhaps some changes could be made to Tri-Care to bring it more in line with "normal" civilian and other civil service insurance plans. Surely if some deductibles and co-pays were implemented along with some other changes it would be feasible to save a bunch of the annual cost to taxpayers. If just 1/3 of the cost were saved, that would be an additional $16 billion a year savings and the military retirees would still have great health insurance coverage. They would still have the full access to the VA system as they do now.

3blindmice 1 year, 9 months ago

sounds like a republican plan to turn their backs on the veterans once they have secured all that oil for the oligarchy that runs this country.

Gabrielle 1 year, 9 months ago

3blindmice:

what part of JCLifer's suggestion would you change? - I am thinking this offers a relatively generous alternative given current financial/economic circumstances.
pertaining to securing the oil - are you saying that once our government has 'control' of the oil in the middle east, veterans will not be the priority many make them out to be now?
the oligarchy you refer to - corporations, federal elected officials or someone else?

do tell.

spelchek 1 year, 9 months ago

What on earth is up with people hating on people that accumulate wealth? You are either lazy, a non-producer, and/or ignorant, or have never been self employed or had to make a pay roll. Just exactly how much money can someone make in your eyes? What is the cap and why? And another thing, I had a grandfather with a purple heart, a grandfather that almost froze to death in Korea, and another grandfather that died a few years ago with shrapnel behind his eye. None of them ever complained and neither should you about their pensions, you ungrateful slugs.

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