January 30, 2015

The FY13 National Defense Authorization Act (NDAA) established a nine member independent commission to review all military compensation, benefits and retirement.

The MCRMC spent nearly two years studying military compensation and benefits before releasing its long anticipated report in January 2015. The commission put forth 15 recommendations for Congress and the administration to consider regarding military pay and benefits.

For MOAA’s analysis on the MCRMC proposals, please see the links below. The report is separated into three sections:

Pay and Retirement:

At the top of list is replacing the current 20-year cliff-vesting military retirement system with a blended defined benefit and 401k-style retirement package. The proposal would be optional for the current force, and mandatory for new service entrants. Current retirees will not be affected by recommended reforms.

The MCRMC recommendation would allow servicemembers who don’t reach the 20 year threshold to leave with a personal retirement account, but it would also create more uncertainty for the retirement benefits of those who serve a full career.

Key facets of the retirement proposal include:

• Reduce the defined benefit multiplier
• Automatically enrolling all servicemembers in the Thrift Savings Plan (TSP)
• Providing an automatic government contribution to TSP

Healthcare

In a controversial recommendation, the MCRMC wants to eliminate TRICARE for military families and working age retirees and replace it with a selection of commercial insurance plans similar to those available for federal civilian employees.

For key segments of the military community, the proposals include:

• Active duty families: creating a new Basic Allowance for Health Care (BAHC) to purchase commercial health care and cover most out of pocket expenses
• Retirees under 65 and dependents: Eliminating TRICARE options and replacing them with a number of commercial health insurance options (similar to the Federal Employees Health Benefit Program)
• Retirees over 65 and dependents: Keeping TRICARE For Life as-is

Quality of Life Programs

The MCRMC has a series of recommendations to change quality of life programs. Notable recommendations include:

• Consolidating the commissary and exchange systems
• Expanding Space-A travel benefits
• Creating a four star Joint Readiness Command

The commissioners testified that their mandate was not to cut costs, or reduce compensation and retirement benefits, but to modernize the system in order to ensure the long -term viability of the all-volunteer force.

It’s important to note that the MCRMC put forth recommendations. At this time these recommendations are not legislative proposals.

The Commission’s recommendations will be heavily scrutinized by Congress as it prepares the FY 2016 budget.

If enacted, these recommendations would have a profound impact on the compensation, benefits and quality of life of active, Guard and Reserve service members, retirees and their families.

MOAA urges all members to stay involved and informed through our weekly legislative updates and participate in our calls to action to communicate with your members of Congress.