Lawmakers Eye Changes to Military Pension Plans in Budget Talks

Lawmakers are looking at whether changes to the military's pension procedure can help avoid even deeper cuts from the already-stretched Department of Defense budget next year.

House and Senate negotiators are working on an overall budget deal this week in hopes of avoiding sequestration in January, Politico reports, with the military pension issue taking a major role.

Some $41 billion has already been cut from military spending in 2013, and unless Congress agrees to lift the sequester in January, the Defense budget will need to be trimmed by another $52 billion in January. The 2013 Defense budget stands at approximately $633.3 billion.

Benefits for the military make up a great deal of the Defense budget, said House Armed Services Committee Chairman Buck McKeon, a California Republican.

"Forty-four cents of every dollar we spend goes to military personnel," said McKeon. "You look at Detroit, you look at General Motors, you look at what happens when you build up these costs, but we aren't doing anything about it in our [Defense] bill this year."

President Barack Obama's 2014 budget proposes that federal employees increase their contributions to their pension plans, at the same time ending supplemental retirement payments to future federal workers. Such pay deductions are not demanded from active-duty military, however. Instead, Congress appropriates billions toward the military's pension costs. But while the 2014 appropriation comes to nearly $16.8 billion, the Congressional Budget Office estimates $50 billion is paid out each year to military retirees and survivors.

The pension system also only benefits military personnel who have served for 20 years or more, so officers are more likely to collect pensions than enlisted personnel. However, if officers contribute 2 percent of their base pay to the retirement, that could save the military billions of dollars over the next decade.

A CBO report also suggests lengthening the pay period used to calculate pensions.
The calculation is based on the three consecutive years of highest earnings, but if that is changed to five years, the combined pension costs for the military's civilian workers and active personnel would be trimmed by $5.5 billion over 10 years.

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