June 12, 2015
months of delays, Pentagon officials came out in support of changes to
the military retirement system. Their endorsement sets the stage for
major reforms later this year.
House and Senate lawmakers
already introduced retirement reform proposals earlier this year. Their
proposals are currently being negotiated as part of this year's defense
Pentagon officials are asking Congress to make changes
to their retirement proposals. Sharing the same concerns that MOAA has
raised with lawmakers over the past year, they are asking Congress to
make changes to disability retirement, the length of government
contributions to retirement accounts, lump-sum proposals, and COLA
One of MOAA's earliest concerns with
retirement reform proposals was their effect on disabled retirees.
Changing the multiplier used to calculate military retirement could
diminish a disabled retiree's pension. Defense officials asked Congress
to grandfather disabled retirees under the current system. "This
prevents more senior members from receiving less in a disability
retirement annuity than the current system," according to DoD.
planners agreed with MOAA that Congress continue contributions to
retirement accounts throughout military service. The Senate's retirement
proposal stops government matching at 20 years. MOAA thinks ending
government contributions at 20 years will dis-incentivize continued
The Pentagon also agreed with MOAA's criticisms on
potential lump-sum retirement benefits. This option provides a
discounted, small lump sum while forgoing significant lifetime annuity
payments. In its memo to Congress, Pentagon officials said that a
lump-sum payment at retirement is a "smart financial decision in very
limited circumstances." MOAA took a stronger stance, equating the
payments to unscrupulous payday lending practices.
for comprehensive retirement reform, DoD also asked Congress to
eliminate an unfair penalty on working age military retirees. Under
current law, military entrants who joined after Jan. 1, 2016 will have
their future COLAs reduced by one percentage point until age 62. The
military said that even by restoring full COLAs, the Defense Department
could achieve savings with the new retirement system.
the Pentagon provided its recommendations in time for House and Senate
leaders to consider when they conference later this year," said MOAA's
Director of Government Relations, Col. Mike Hayden, USAF (Ret).
the Pentagon addressed some of our concerns, MOAA still worries that a
20 percent reduction in retired pay will fail to draw members to 20
years of service and beyond.