Tags: John McCain | military | pension | John McCain | 401k

Military Pension Changes to be Proposed

By    |   Wednesday, 28 Jan 2015 03:02 PM

An independent commission is expected to call this week for creation of a 401(k)-style retirement system as part of an overhaul to the Pentagon's current pension plan, The Wall Street Journal reported.

The change is one of 15 far-reaching proposals that the panel (the Military Compensation and Retirement Modernization Commission) is expected to unveil Thursday, part of a 300-page report that is supposed to function as a "roadmap" for the Obama administration, Congress, and the Defense Department as they try to rein in future costs of military benefits.

In recent decades, private-sector pensions have been repeatedly rolled back or eliminated.

But the defined-benefit pension has remained a cornerstone of military recruitment, helping make personnel costs the fastest-growing part of the Pentagon budget. From 2000 to 2014, these costs rose by 46 percent to $142 billion annually, according to the Congressional Budget Office, and now comprise about one-third of the defense budget.

While the commission's proposals would not replace the existing defined-benefit plan and would not affect benefits for members of the military, they are still certain to trigger controversy.

The recommendations are also expected to include changes aimed at fixing the Defense Department healthcare system, which provides generous benefits to veterans and their families.

Earlier this month, Senate Armed Services Committee Chairman John McCain indicated he might be able to support changes similar to the ones the panel is expected to put forward on Thursday.

"I can probably support a number of changes that need to be made," the Arizona Republican said, adding that the military healthcare system "has to be reformed."

Pointing to last year, when Democrats and Republicans in Congress joined to reverse a cut in pensions for working-age military retirees, many veterans of earlier budget fights express skepticism that lawmakers will back significant changes in the near future.

"There is nothing that this administration is going to deliver with a Republican Congress that is going anywhere for two years that somehow curbs our pay, our compensation, our benefits for the military," a senior Pentagon official told The Wall Street Journal. "It’s just not going to be. You can study all these things, but nothing’s going to happen very soon."

Under the current military pension system, the government provides retirees a fixed benefit after 20 years' service. The commission is expected to recommend making the military system more like the one offered to other federal employees who contribute to their retirement plans and receive matching contributions from the taxpayers.

While that change is meant to provide benefits to military retirees serving less than 20 years, critics worry that it could provide an incentive for well-trained officers to leave the military before they otherwise would.

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An independent commission is expected to call this week for creation of a 401(k)-style retirement system as part of an overhaul to the Pentagon's current pension plan, The Wall Street Journal reported.
military, pension, John McCain, 401k
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2015-02-28
Wednesday, 28 Jan 2015 03:02 PM
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