Military Pension Cuts Could Save The Budget

    December 23, 2013

Defense Secretary Chuck Hagel has ordered a 20 percent cut in “burgeoning military personnel costs” in an effort to slim down the military costs plaguing the country.

“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.”

But this decision is met with some pretty outraged veterans, their spouses and veteran groups. The fight is to hold onto their retirement pay and possibly curb the pension increases slated for military retirees that are under age 62. This is all part of a new deal passed by congress – awaiting the presidents signature.

Retirees want the belt-tightening done elsewhere.

Apparently – and according to military analysts, military compensation is competitive with the civilian pay, 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.

Christensen went on to explain that only a small portion of that amount is base pay. The rest is allocated to a housing and food allowance, both tax-free. An Army captain with six years of service and no dependents averages $93,800 annually.

And what hasn’t been addressed is the fact that all military members have access to free health insurance, including their families.

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.

They also receive “quality of life” benefits, which encompass things like help paying for continuing education, separate schools in some cases, commissaries where food is 30 percent below retail prices and exchanges where clothing and gear is highly discounted.

Also noted is that they receive a highly discounted day care system, which is used now by more than half of the 1.4 million-member force and their estimated 1.2 million children.

The hitch though is there is no retirement pension if you aren’t in service for 20 years. And for those who are in 20 years, they get it as they are getting out, instead of having to wait – like the rest of the country – until age 62.

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.

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.

Authorities feel that this 100-year-old pension was designed when people didn’t live as long, and are looking at options such as lump sum payouts at departure, and basically modernizing the system.

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.

Image via Wikimedia Commons