Pentagon Probes for Details on Proposed Military Retirement Overhaul

military

Last month, the Military Compensation and Retirement Modernization Commission released a long-awaited report containing a series of policy proposals designed to decrease the cost of military benefits, including retirement benefits.

One of the more controversial proposals: the phase-out of the military’s current defined-benefit plan in favor of a hybrid plan that features characteristics of a 401(k).

[Proposal details can be read here.]

Now, the Pentagon is digging deeper into the report, and officials are asking for access to the data that was used to form the proposals.

From the Military Times:

“[The commission] claims they’ve done all the analysis but we have not been able to see what’s inside that analysis, so I’m anxious to see it . … We are interested in looking at how the commission came to the conclusion that [its proposed retirement recommendations] would be a better option,” [Defense Department Chief of Naval Personnel Vice Adm. Bill] Moran said.

Military officials are receptive to the idea, Moran said, noting that the Defense Department last year offered its own proposal for military retirement reform that includes some similar features.

Still, Moran said he’d like more information about the commission’s claim that troops would prefer the proposed system and it would not affect retention.

“There are aspects we like and aspects we need more analysis on,” Moran said.

Top personnel officials have been working around the clock to analyze the controversial proposals.

Why is the Pentagon examining the proposals so closely?

The Pentagon’s official view of the report will hold sway on Capitol Hill when it comes time for lawmakers to vote on the proposals.

 

Photo by Brian Schlumbohm/Fort Wainwright PAO

Military Pension Cuts a Tough Sell in Congress

military

Last month, the Military Compensation and Retirement Modernization Commission produced a report that recommended a series of changes to the military’s retirement benefit system.

Among the proposals: shrinking retirement pay by about 20 percent, and phasing out the military’s current defined-benefit plan, in favor of a hybrid plan that features characteristics of a 401(k).

Another proposal however, would make benefits richer for long-time military members.

But Congress remained skeptical on Wednesday. From the Military Times:

Some lawmakers questioned the piece of the new retirement system that would offer troops a lump-sum “continuation pay” at 12 years of service. The commission’s data claiming that career troops would accrue more total benefits under the proposed system assumes that individual troops invest that money into their personnel retirement account and not touch it until age 59 and a half.

Rep. Susan Davis, D-Calif., doubted that all troops will make that decision.

“What if that assumption doesn’t bear out?” she said. “Is the whole program impacted if they don’t do that? Does it rest on that assumption?”

[…]

Rep. Joe Heck, R-Nev., chairman of the personnel panel of the House Armed Services committee, who is also a trained physician, raised concerns about the commission’s claim that Tricare is reimbursing doctors at rates lower than government-run Medicare and fair-market value.

“As a health-care provider for over 30 years, I question that assumption,” Heck said.

Military compensation is a controversial area for cuts, so it’s unclear if the political will exists to move forward with any of the commission’s proposals.

However, John McCain said last month he was open to reforming the military’s retirement system. From Military.com:

Sen. John McCain, chairman of the Senate Armed Services Committee, took the opposite position, saying he was open to possible changes in pay and benefits.
“I can probably support a number of changes that need to be made,” McCain said without giving specifics. He singled out the military health care system, which he said “has to be reformed.”

Read more on the proposed changes here.

Photo by Brian Schlumbohm/Fort Wainwright PAO

Minnesota Legislation Would Exempt Military Pensions From Taxes

military

Minnesota is one of six states in the country that fully taxes military benefits.

But that could change soon, as two pieces of legislation in the state House seek to exempt some or all of military pensions from taxation.

The first, introduced by Rep. Bob Dettmer, would exempt from taxation the first $30,000 of military retirement benefits earned, regardless of the retiree’s rank.

Rep. Josh Heintzeman has introduced a similar bill. But Heintzeman’s version would exempt all military retirement income from taxation.

More from KARE 11:

Many military retirees end up in warmer states than Minnesota, both when it comes temperatures and tax climate.

But there are several bills in the hopper this year in the State Legislature designed to draw those retirees here, and hold onto the ones who already live in Minnesota.

“Most of them will be in the 40’s, so they’ll be starting a second career and that’s an economic boost for the state,” Rep. Bob Dettmer of Forest Lake told KARE

He said there are 370,000 military veterans living in Minnesota, and at least 18,000 of them were career military members who served long enough to earn a pension.

Rep. Dettmer would like to see at least part of those pensions exempt from state income taxes.

[…]

“If we really want to hire veterans we’ve got to get them to live here. We want to have them stay here, put their kids in school, buy homes, and be part of Minnesota. Many other states have already figured this out.”

Rep. Dettmer’s bill has drawn more support than Heintzeman’s, as some lawmakers are more comfortable with “capping” the tax exemption.

 

Photo by Brian Schlumbohm/Fort Wainwright PAO