The Times West Virginian

Headline News

December 24, 2013

Fight over military pension cuts to continue

WASHINGTON — The Pentagon’s top civilian says it’s time to tame burgeoning military personnel costs, but he’s facing a test of wills with the nation’s powerful veterans groups, which want no cut in their benefits.

Veterans groups are fighting curbs in annual pension increases for military retirees under age 62 that are part of the new budget deal passed by Congress last week and awaiting President Barack Obama’s signature. After a barrage of protests from the military community, lawmakers said they’ll review the cut next year and possibly reverse it. But Defense Secretary Chuck Hagel said Thursday that reform of military compensation can’t be avoided.

“We all know that we need to slow cost growth in military compensation,” Hagel told a Pentagon press conference. “We know that many proposals will be controversial and unpopular. ... Tough decisions will have to be made.”

Retirees want the belt-tightening done elsewhere.

Here’s a look at what members of the U.S. armed forces get now and the debate:

WHAT TROOPS EARN

Due to pay and benefit boosts in recent war years, officials and military analysts say compensation is competitive with the civilian sector — and well above it when comparing people with similar education and experience.

For example, an Army private with fewer than two years of service and no dependents earns on average about $40,400 annually, said Navy Lt. Cmdr. Nathan Christensen, a Defense Department spokesman. About two-thirds of that is base pay and the rest a housing allowance and a food allowance, with no taxes paid on the two allowances. An Army captain with six years of service and no dependents averages $93,800 annually.

Active duty military members also get all of their health care for free. Their spouses and children get free care at military treatment facilities. If dependents use a private doctor, dentist or pharmacy, they get the care through the department’s TRICARE system, paying no premiums and no co-pays, said Austin Camacho, a system spokesman.

The force also gets what the Pentagon calls “quality of life” benefits, like help paying for continuing education, separate schools in some places for their children, commissaries where they buy food at an estimated 30 percent below retail prices and exchanges where they buy other deeply discounted goods like clothing and household items. Greatly discounted day care is available through the department’s child development system, which officials say has grown to serve the largest number of kids daily among the nation’s employers — now that more than half of the 1.4 million-member force is married and they have 1.2 million children.

While serving, some are and some aren’t able to build much of a retirement nest egg on their own. There’s a savings plan, though there are no employer matching funds, and moving every two or three years due to reassignment can affect the service members’ ability to build equity in their homes and the spouse’s ability to build a career that brings in a good second income.

WHEN THEY RETIRE

The military retirement system is unfair and costly. Only 17 percent of service members — those who serve 20 years — get pensions, the Pentagon says. Most people don’t stay that long, meaning 83 percent who serve less than two decades get no retirement pay.

But someone who enters the military at age 18 and stays 20 years starts drawing pension checks worth half their base salary immediately at age 38 — rather than having to wait until their 60s — and gets the payments for life. It’s a practice without parallel in the private sector, though some government agencies such as city police departments do it.

Critics say 40 years of pension for 20 years of work is overly generous, but retirees say they deserve it for doing risky jobs that are tough on them and their families and that the overwhelming majority of Americans don’t volunteer for.

A Navy Chief Petty Officer who earned $80,000 a year, is married and served for 20 years can immediately get a pension of about $2,200 monthly that would grow with cost-of-living increases. He or she can get free health care at military facilities on a space-available basis and can continue using commissaries — the latter two benefits being a reason some retirees like to live near military installations, officials say. Those who enroll in TRICARE insurance for private sector care can pick between two plans, paying only $274 annually for an individual or $548 for the family for the standard plan, far below civilian insurance costs.

There are nearly 2 million retirees currently getting military pensions at an annual cost to the Defense Department of $4.5 billion. Of those, 840,000 are under 62 — and more than 80 percent of those were enlisted, as opposed to higher-paid officers.

The retirement system hasn’t been changed materially in more than 100 years and was designed when people didn’t live as long, second careers were rare and military pay was low. Many people now have second careers after retiring, collecting the pension as well as income from their new jobs — and in their 60s are also getting Social Security payments, to which they contributed while in the military.

BREAKING FAITH?

The change provoking outrage among military and veteran groups this week would reduce retirement benefits for working-age retirees. Starting Dec. 1, 2015, cost-of-living adjustments for pensions of people under 62 would be modified to equal inflation minus 1 percent; then at 62, retirees would receive a “catch-up” increase that would restore their pensions to reflect levels as if the cost-of-living adjustment had been the full consumer price index in all previous years.

But they wouldn’t get back what was lost, meaning a reduction of nearly $72,000 in benefits over a lifetime for a sergeant first class who retires at age 42, by one group’s estimate. Sen. John McCain, R-Ariz., said a veteran of identical rank who retired at 38 would still wind up with $1.62 million in retirement pay over a lifetime.

But officials have said repeatedly in recent years that changes in the system would not affect current military members or retirees. Rather, they would be applied to future recruits.

“Keep your promise” was the theme of a lobbying effort by the Military Officers Association of America.

American Legion National Commander Daniel M. Dellinger said the group was “horrified” that the Senate could pass a bill “so unfair to those Americans who have served honorably in uniform.”

The Veterans of Foreign Wars predicted the change would prompt an exodus of those at midcareer once the U.S. economy rebounds, and that it will hurt efforts to recruit new people into the all-volunteer force.

CHANGE IS COMING, BUT WHAT CHANGE?

By passing the pension cut now, lawmakers jumped the gun on a review panel broadly studying modernization.

The nine-member Military Compensation and Retirement Modernization Commission was mandated in the last budget year to study the full breadth of issues including regular military pay, health care, the promotion system, retirement pay and family support programs. “Everything is on the table,” Christensen said.

In an era of tight budgets, personnel costs now make up nearly half of the Pentagon’s funding, and officials fear continued growth will force disproportionate cuts in other areas, such as training and equipment. Health costs alone have skyrocketed nearly 200 percent since the year 2000 and will balloon further in coming years without changes, officials say.

“Modernization is a certainty,” said James Hosek, a senior economist at the RAND Corporation and expert on defense manpower.

Retirees argue that cutting troop benefits is the last thing that should be done — and some suggest efforts to curb personnel costs should first target what they see as bloated civilian staffs as well as redundant uniformed bureaucracy in which each service branch has its own medical command, cyberassets, intelligence assets and uniforms —  just to mention a few complaints.

Ideas already floated for compensation changes include earlier vesting in pensions; giving troops a lump sum on departure rather than long-term pensions; slightly increasing health care premiums; and replacing pensions with a 401(k)-type saving plan, which would be offered, not forced on current members and retirees. Some analysts say modernization will inevitably mean less generous benefits for military members, but others hope that may not be the case if creative efficiencies can be found.

The challenge for the commission is to reform programs so they’re more affordable and sustainable and yet offer benefits attractive enough to keep drawing people to volunteer for the nation’s armed forces.

The panel is scheduled to make recommendations to Congress and the president in May.

 

1
Text Only
Headline News
  • Study: Fist bumps less germy than handshakes

    When it comes to preventing the spread of germs, maybe the president is on to something with his fondness for fist bumps.

    July 28, 2014

  • Obama Exporting Pollu_time.jpg ‘Not in my backyard’: U.S. sending dirty coal abroad

    As  the Obama administration weans the U.S. off dirty fuels blamed for global warming, energy companies have been sending more of America’s unwanted energy leftovers to other parts of the world where they could create even more pollution.
    This fossil fuel trade threatens to undermine President Barack Obama’s strategy for reducing the gases blamed for climate change and reveals a little-discussed side effect of countries acting alone on a global problem. The contribution of this exported pollution to global warming is not something the administration wants to measure, or even talk about.

    July 28, 2014 1 Photo

  • U.S.: Russia fired rockets into Ukraine

    Stepping up pressure on Moscow, the U.S. on Sunday released satellite images it says show that rockets have been fired from Russia into neighboring eastern Ukraine and that heavy artillery for separatists has crossed the border.
    The images, which came from the U.S. Director of National Intelligence and could not be independently verified by The Associated Press, show blast marks where rockets were launched and craters where they landed. Officials said the images show heavy weapons fired between July 21 and July 26 — after the July 17 downing of Malaysia Airlines Flight 17.

    July 28, 2014

  • Plan to simplify health renewals may backfire

    If you have health insurance on your job, you probably don’t give much thought to each year’s renewal. But make the same assumption in one of the new health law plans, and it could lead to costly surprises.
    Insurance exchange customers who opt for convenience by automatically renewing their coverage for 2015 are likely to receive dated and inaccurate financial aid amounts from the government, say industry officials, advocates and other experts.
    If those amounts are too low, consumers could get sticker shock over their new premiums. Too high, and they’ll owe the tax man later.

    July 28, 2014

  • W.Va. Judge: WVU, IMG College deal is OK

    A judge has denied a motion by West Virginia Radio Corp. to toss the media rights contract between West Virginia University and IMG College.
    Media outlets report Monongalia County business court circuit judge Thomas Evans set aside a motion for summary judgment against WVU and others.
    West Virginia Radio was seeking to void any contract entered by WVU and IMG. West Virginia Radio unsuccessfully bid on the contract, then filed a motion for summary judgment in February, claiming school officials violated state procurement laws.
    Evans ruled the code cited by the plaintiffs didn’t apply to the $86.5 million, 12-year agreement reached last year.

    July 28, 2014

  • Powerful storms rip through eastern U.S.

    Powerful storms raking across several states in the eastern U.S. on Sunday have destroyed at least 10 homes in Tennessee, and there were no immediate reports of any deaths or injuries, authorities said.

    July 27, 2014

  • Lawmakers say Obama too aloof with Congress

    President Barack Obama’s request for billions of dollars to deal with migrant children streaming across the border set off Democrats and Republicans. Lawmakers in both parties complained that the White House — six years in — still doesn’t get it when it comes to working with Congress.

    July 27, 2014

  • U.S. faces intelligence hurdles in downing of airliner

    A series of unanswered questions about the downing of Malaysia Airlines Flight 17 shows the limits of U.S. intelligence gathering even when it is intensely focused, as it has been in Ukraine since Russia seized Crimea in March.

    July 27, 2014

  • House approves bill to boost child tax credit for some

    More families with higher incomes could claim the popular child tax credit under a bill that won approval Friday in the House. But in a dispute that divides Republicans and Democrats, millions of the poorest low-income families would still lose the credit in 2018, when enhancements championed by President Barack Obama are set to expire.

    July 26, 2014

  • U.S.: Russia firing across border into Ukraine

    Russia is launching artillery attacks from its soil on Ukrainian troops and preparing to move heavier weaponry across the border, the U.S. and Ukraine charged Friday in what appeared to be an ominous escalation of the crisis.
    Russia accused Washington of lying and charged Ukraine with firing across the border on a Russian village. It also toughened its economic measures against Ukraine by banning dairy imports.

    July 26, 2014

House Ads
Featured Ads