May 1, 2015

Congress is moving forward with a dramatic overhaul to military retirement. After an 18-hour marathon session, the House Armed Services Committee completed its markup of the FY16 defense bill on April 29.

 

The bill contains a controversial provision to change the retirement system to a blended plan where troops and the government contribute to Thrift Savings Plan accounts.

 

If enacted, future retirees face a 20 percent reduction in retired pay. To make up for the reduced retired pay, servicemembers will receive government contributions to low cost government 401k accounts. The expectation is that TSP contributions will make up for any lost retired pay. The proposal is similar to reforms recommended by the Military Compensation and Retirement Modernization Commission (MCRMC).

 

The intent of the proposal is to give troops who serve less than 20 years a nest egg for retirement.

 

The changes, if enacted, will go into effect in Oct. 2017.

 

Not All In Agreement

 

Rep. Chris Gibson’s (R-N.Y.), a retired Army colonel, introduced a MOAA-supported amendment to the defense bill to delay implementation of the retirement proposal. The amendment urged Congress to delay action until legislators conducted listening tours on military installations within their congressional districts.

 

Saying that fast-tracking reform is “premature,” Gibson warned the committee that not enough people are following the issue. “This vote is a vote … to cut retirement at 20 years. That is a fact.”

 

In a letter to House colleagues, Gibson said, “During my 29 years of service as an enlisted Soldier, junior officer, and a company commander at the Company, Battalion and Brigade levels, I have experienced and personally addressed countless Soldier concerns and issues. One of the most prominent concerns was a Soldier’s pay and financial stability. … Before transitioning the responsibility of retirement and healthcare from the employer (the service) to the employee (the service member), a robust plan must be discussed to ensure these reforms do not unduly burden service members, their families, and veterans, many of whom who already face significant financial difficulties.”

 

Gibson made an impassioned plea for the committee to accept his amendment and listen to troops and families affected by retirement reforms. Gibson does not believe that the military community is aware of the provision to overhaul military retirement and he thinks, “it [is] very important to the unit to get a shared sense of the vision of the organization before we moved forward.”

 

The committee rejected the amendment by a vote of 55-8.