March 27, 2015
MOAA testified beside several other military advocacy groups concerning recent recommendations by the Military Compensation and Retirement Modernization Commission (MCRMC).
Panelists split over proposals that would dramatically alter retirement benefits.
Speaking before the House Armed Services Committee, MOAA’s Director of Government Relations, Col. Mike Hayden, USAF (Ret) questioned whether proposals to shift servicemembers into a 401k retirement system “will encourage more people to leave or stay.”
“We are very concerned that the new system lacks the drawing power to sustain service members to 20 years of service,” Hayden stated.
Under the MCRMC’s retirement proposal, servicemembers will receive a 20 percent reduction in military retired pay, in addition to matching government contributions in the federal Thrift Savings Plan.
The success of the commission’s proposal is completely dependent on the financial literacy of the force. Unfortunately, by the commission’s admission, only 12 percent of servicemembers surveyed said that they received financial information from their command or installation.
The proposal also stops government contributions for those who serve more than 20 years of service. For troops who choose to stay on past the 20-year mark, the lifetime loss in retirement value could be dramatic.
HASC Personnel Subcommittee Chair, Joe Heck (R-Nev.), echoed MOAA’s concerns. “As Colonel Hayden pointed out, when you retire at 20, the amount that you are going to get paid from year 20 until you’ve reached full retirement age is going to be less than you otherwise would get; in some cases, significantly less.”
Further divisions over health care
Panelists also offered differing views on the MCRMC’s health care proposals.
The MCRMC proposes privatizing TRICARE. Family members and retirees would be moved into a health care system similar to one used by federal civilians. Active duty personnel would continue to receive care on base and would receive a health care allowance to pay for family plans.
While some of the groups testifying were receptive to the idea of increased access and choice, the commission’s proposal envisions retirees and family members paying four times more in health care costs.
Moving beneficiaries into a civilian-style health plan is detrimental to military medical readiness. In separate testimony earlier in the day, Army Surgeon General Patricia Horoho said, “Any radical departure from our combat-tested system would degrade readiness in an environment where our next deployment could be tomorrow."
Servicemembers deployed across the world should not have to worry whether they have selected the appropriate health care coverage. They are not in a position to absorb the risk of a plan not working.
Instead of dismantling TRICARE, MOAA believes the appropriate way forward is to create a unified medical command. A unified medical command will save money without negatively affecting beneficiaries.
“Without a unified budget or oversight authority,” Hayden said, “TRICARE will remain stove-piped and sub-optimized.”
The commission and MOAA both seek the same objective: to provide the necessary pay and benefits needed to sustain the all-volunteer force more effectively and efficiently.
Changes this drastic, however, demand a measured approach to ensure the right strategy-based decisions are made for the right reasons, and MOAA appreciates the opportunity to provide analysis.