The commission charged with modernizing military pay and benefits said Thursday it’s found a way to get more money into troops’ and veterans’ pockets, while trimming the Pentagon’s budget in the long run through changes to retirement pay and Tricare health coverage.
The Military Compensation and Retirement Modernization Commission also proposed modest tweaks to education opportunities, exchange and commissary benefits, and said the Pentagon should step up financial literacy training so troops can navigate the changes and new options the panel is recommending.
Congress and the White House will now consider the set of 15 recommendations, and decide whether to accept any or all of them.
On Thursday, the White House, members of Congress and veterans groups thanked the commission for its work, but said they’d have to study the report, which runs to nearly 300 pages, more fully.
“The commission’s report includes a number of specific proposals that I will review closely over the coming weeks,” President Obama said in a statement. “I look forward to hearing their views and working with Congress to strengthen and modernize our military compensation and retirement systems.”
Lawmakers had put off a number of big military budget decisions while awaiting the report — including scrapping a December 2013 change to military retirement pay cost of living adjustments that was designed to save billions of dollars.
That COLA adjustment isn’t part of the panel’s recommendation. The commission went a different direction, proposing cutting the amount a retiree receives in his or her annuity while instituting a 401k-like system, with troops automatically enrolled and the government matching part of their contributions.
Under the current retirement system, a senior enlisted service member who served for 20 years would amass a total of $201,282 in retirement assets, according to the report.
If Congress decides to implement the plan proposed by the commission, that same E-7 would get only $161,025 in defined benefits. But with the government and service member’s contributions to their 401k-like plan, they’ll have a total of $248,649.
Despite service members receiving more money overall, the government would save more than $12 billion if all the changes were instituted, Bob Daigle, executive director of the commission said, though it’s unclear over what time period the savings would be achieved.
The retirement changes recommended would only apply to those recruited after the proposal became law, not current retirees or those in the service now. Other reforms like health care would effect all current and retired service members.
The new system would also allow more service members to take advantage of retirement benefits, rather than only those who stay in the service for the full 20 years. Mr. Daigle estimated that 75 percent of the force would get some sort of retirement benefit by contributing to the thrift savings plan, compared less than 20 percent under the current system.
Rep. Michael Coffman, Colorado Republican and a Marine Corps combat veteran, said he welcomed the commission’s recommendations that would open retirement benefits to those who didn’t serve the full 20 years “because our outdated ‘all or nothing’ retirement system is a relic of the past and must be modernized to meet the needs of today’s men and women who serve our country in uniform.”
The commission also urged Congress to eliminate Tricare for active duty family members, National Guard and reserve service members and middle-aged retirees who are not covered by Tricare for Life. These groups would choose health insurance from a selection of private health insurance plans, with active duty family members receiving a stipend to cover both premiums and out-of-pocket costs.
Active duty military and older retirees would see no changes to their health care.
Members of the commission are scheduled to appear before the Senate Armed Services Committee on Tuesday to discuss the recommendations in the report.