Battle over Military Pay

Discussion in 'Academy/Military News' started by tankercaptain, Dec 30, 2014.

  1. tankercaptain

    tankercaptain Member

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    DoD braces for political battle over military pay


    Monkey Business Images/Getty Images
    The Pentagon is setting up a rapid-response plan to guide officials in reacting to a report on pay, benefits and retirement that is to be released in February, Military Times has learned. less
    The Pentagon is bracing for one of its biggest political battles in years as a blue-ribbon commission on military compensation and retirement nears the end of its two-year study and moves closer to releasing its proposals for change by Feb. 1.

    An internal document obtained by Military Times reveals the Defense Department is setting up a rapid-response plan that will scrutinize the commission's potentially controversial proposals and send a recommendation to President Obama within 60 days, or by April 1.

    DoD leaders have no idea what the independent commission will propose to Congress, so they have tapped a team of high-level officials to review, analyze and prepare a formal response to influence a potentially historic vote on Capitol Hill.

    The stakes are high; the commission's report is likely to set off a far-reaching debate about the future of the military compensation system, with a basic structure that has changed little over the past century.

    In some ways, the Pentagon is eager to support big changes that might cut personnel costs and reduce long-term defense spending and save money for investments in research and new weapons systems.

    At the same time, military officials worry that sweeping changes to military compensation — such as radically changing the current retirement system — could devastate recruiting and retention and threaten the long-term health of the 41-year-old all-volunteer force.

    The report from the Military Compensation and Retirement Modernization Commission will include detailed legislation that members of Congress may immediately begin debating, revising or potentially putting to a vote.

    The commission's recommendations likely will include contentious proposals, such as replacing the military's 20-year cliff-vesting retirement model, creating new incentive pays or eliminating some in-kind benefits that service members receive in the form of installation-based services.

    As the Pentagon and the White House begin facing pointed questions about how the proposals might impact readiness, defense officials will launch an intensive internal review that ultimately will inform Obama's official position.

    From Feb. 2. Through Feb. 6, several Pentagon "working groups," as well as a team from the RAND Corp, think tank, immediately will begin to analyze the proposals, according to the internal DoD document.

    Separate "working groups" will study topics that include "pay and retirement," "health benefits" and "quality of life benefits," according to the four-page PowerPoint, dated Dec. 18.

    The working groups will mostly include officers at the O-6 level from each service and civilians at a similar pay grade.

    Specifically, the analysis will focus on the potential impact on recruiting and retention and will aim to "develop the DoD response for Presidential consideration," according to the document.

    From Feb. 9 to 13, the working groups will convene at an "off-site location" for further analysis.

    From Feb. 17 to 19, members of the working groups will brief their services' senior leaders on the status of the Pentagon's official response.

    By Feb. 26, senior leaders, including the undersecretary for personnel and readiness, will receive a draft of the formal response.

    By March 6, the Joint Chiefs will vet DoD's official position on the commission recommendations. At the same time, Pentagon civilian leaders will reviewing it in a process led by Deputy Defense Secretary Robert Work.

    By March 13, the defense secretary will approve or reject a final version of the Pentagon's response. It's unclear at this point if that will be outgoing Defense Secretary Chuck Hagel or his successor, Ash Carter, who is likely to be confirmed by the Senate in early 2015.

    From there the official response will go to the White House, where it will face further review.

    The DoD plan aims to have Obama provide formal recommendations to Congress by April 1.
     
  2. LineInTheSand

    LineInTheSand USCGA 2006

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    The working group will mostly include individuals who have a direct interest in retirement and benefits.....

    let me know how that goes. :rolleyes:
     
  3. Juvat

    Juvat Member

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    yes, a direct and "immediate" interest...:rolleyes:
     
  4. scoutpilot

    scoutpilot Member

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    Anyone who's an O-6 is already fully vested under the old system anyway. Furthermore, anyone currently in would retain the benefits per their original BASD, as those who entered under the old "high pay" system did before we went to the "high-three" system.
     
  5. LineInTheSand

    LineInTheSand USCGA 2006

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    I'm not so sure the "old system" is untouchable. It hasn't been on the local levels.... no reason to think it is at the federal level.
     
  6. scoutpilot

    scoutpilot Member

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    Other than precedent, no. Nothing is, in actuality, "untouchable," but at the end of the long debate there are more Congressmen and Senators who want to be re-elected than not. I'll firmly bet on those already serving under the current system keeping their contractual benefits.
     
  7. LineInTheSand

    LineInTheSand USCGA 2006

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    My prediction.... a slowly dismantling of the system for folks who even bought into the system already.

    If I'm wrong, it's good for those individuals, if I'm right.... I'll write a book!*

    * - I may not write a book.
     
  8. Jcleppe

    Jcleppe Member

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    Just a thought, and you can all tell me how this wouldn't or would work.

    Keep the current 20 year retirement system as it is now, but have the pay benefits not start for 10 years after retirement or age 62, which ever comes first. This would save the defense budget millions each year while still maintaining the carrot on a string for recruitment and retention.

    Again just a thought.
     
  9. LineInTheSand

    LineInTheSand USCGA 2006

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    I don't see why they don't just contribute to a 401K like the rest of the country. Granted, a 50% salary for 20 years of work is pretty damn attractive. But having a contribution program would help the majority of the military that serves less than 20 years have SOMETHING to go into the private sector with.

    Works for the private sector. Work for federal civilian employees. Why is this not the path for the military?
     
  10. Jcleppe

    Jcleppe Member

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    I think it's hard to compare a 9-5, 5 day a week civilian or government job where you get to live in the same house in the same town for 20 plus years, to 20 plus years in any branch of the service. They just aren't the same.

    I do see the benefit of having a 401K style plan which would be beneficial to those that leave the service before 20 years, but I also see the benefit to retirement for those that served 20 years in a career that includes moving every 3 or so years, and can never be classified as a 9 to 5, 5 day a week job.

    It's going to be a hard decision to make and I can see the argument for both sides.
     
  11. LineInTheSand

    LineInTheSand USCGA 2006

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    I don't think it is that hard to compare. We can muddy it up, sure.

    Here's my view.

    The vast majority of the military serves under 20 years, and has nothing to show for it, as far as retirement is concerned. Yes, they can contribute to their own savings plans, but it's nice to have an employer match it.

    Pay in the military isn't "horrible". Yes, it's much better for officers. The gap between the public and private sectors is not what it once was. BAH.... non-taxed pay.... is big. All of those little add ons help. Regular promotions (that are timed) is something you won't experience in the real world either. It's a volunteer service, but no one is working for free. I doubt many were ignorant to the pace.... certainly no one is oblivious after 20 years of that life style. It's a job with real risks and real rewards. It's not super human or out of this world.

    And no one in the private sector is retiring at 38 years old.... any system that allows that is unsustainable.

    The current retirement system in the military incentivizes people to work to 20.... if for no other reason than hit the retirement.... requirement (not age).

    I won't get into moving.... 1. because some people enjoy it, 2. because there are attempts to decrease it and 3. because the only hardship for moving generally falls on the families... not the individual.
     
  12. Wilco

    Wilco Member

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    Like the idea of some minor tweaks to include a 401k style plan. But civilian law enforcement, including FBI, and fire departments, offer 20 year retirement, prison system 25. They do so for reason, lot of stress in those positions, and many do not reach their 70s let alone 80s and 90s. I think military personnel who stay in 20 have sacrificed much to serve including those who may not have been overseas or in a combat zone. Loss of holidays with family, relocation stress, not to mention broken families. Coming from an economically tough area service has very often been a ticket out for many I grew up with, education, and security. Hoping the bean counters are able to recognize what our service personnel have given this country.
     
  13. bruno

    bruno Retired Staff Member

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    On top of the reasons that Jcleppe and Wilco have listed above, I would add that it ( a portable contributory retirement "system" ) doesn't "work" for the civilian world though it is what the majority of civilians now have. But while it is a good deal for a certain tier of upwardly mobile top achievers, it is widely recognized as a screw job for the hourly wage earners who populate the manufacturing world-(the counterparts to the vast majority of personnel in the US Military, the Enlisted folks who really are the guts of the military.) Those employees are far worse off than they were in the days of defined pension systems. And companies are not necessarily better off either, despite bean counters protests to the contrary, as it erodes organizational loyalty and increases turnover by incenting employees to constantly search for even small increases over their current positions. That's hard enough to deal with as a manufacturing company- much harder to deal with when the organization is built around a solid and experienced middle tier of experienced leaders. I personally believe that eliminating 20 retirement will really and significantly undercut the military by eliminating what is the biggest retention tool they have for the Enlisted force- and it is that segment of the military that you have to consider. They are the ones who, at a relatively modest pay scale bear the brunt of the crappy details, they are the ones who principally fight and die in those nasty little wars, (of which most people in the Civilian world have no comparable experience,) they are the NCO's upon whom the military relies. By and large they don't wlk out of the service with many of the benefits that folks on this forum are concerned about- free rides to Ivy League equivalent colleges like SA educated Junior officers, and paid-for Masters degrees- like virtually every field grade officer gets.

    That 20 year retirement is in my humble opinion a huge retention benefit to those personnel- a pension coming right at the time when so many actually need it- the height of personal financial obligations (Mortgages, College costs etc...). So when they consider the impact of retirement changes- rather than a blue ribbon panel of O6s - I think they ought to be having the blue ribbon panel primarily composed of E7- E9s and then tell me what the impact of changing the system is.
     
    Last edited: Dec 30, 2014
  14. Jcleppe

    Jcleppe Member

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    Most junior enlisted service members without a degree would not have been entering a civilian job that offers an employer matched 401K, not all companies in the civilian world offer these benefits. While military pay for enlisted has risen, most junior enlisted would not have much left over to contribute to any plan, add a family and that opportunity drops even further. This follows the same pattern of the comparison Bruno just made. Junior officers that are single will be able to take full advantage of a contributory retirement system, given that they receive a generous BAH right out the gate and many share housing that allows them to pocket a significant amount. I think my older son has probably saved more in a year then a junior enlisted member makes in a year. The bulk of the military, the enlisted ranks will not see the perceived benefit of a contributory retirement system, they will be searching outside the military for better opportunities.

    Officer pay is not bad once you add in the BAH and tax benefits, that's true. Now that the Army is following suit with the Navy and Air Force by focusing more on STEM education, these graduates are not making what many of their peers are making in the civilian job market. Junior officers are close to par but once they reach the 10 year mark that gap widens in favor of the civilian market.

    This 10 year mark is where I could see, for a lack of a better term, a "Brain Drain" out of military service. An O-3 or E-6 who has been receiving matched contributions through a Military Retirement Plan could easily decide to make the switch to a more lucrative career since they don't lose anything by leaving early. Granted not all officers and NCO's at this level will get those type of offers, they will go to the best qualified. Those less qualified can always stay where they are at as long as they are not passed over, of course the competition will be less since many more qualified will have made the decision to leave. Many call the retention issue a Red Herring, but I still believe it will become an issue, the military may be able to keep at a mission force level, but will it be the force they want to keep.

    AS far as moving, sure, the military is trying to mitigate the PCS moves but even so they will still happen. The PCS move is not the only hardship, training, deployments, unaccompanied tours of duty, weekend duty among others all take their toll. For single service members this is not as big an issue, for families, much more. Trust me, if the family feels the hardship so does the service member. I agree, service members know what to expect coming in, but for now they also know what benefits they receive if they choose to make a 20 year career out of the military. Will they be lining up at the recruiters door under the new system, maybe, but will they be the ones you really want at the door.

    There is not going to be an easy answer to this and not everyone will be happy or angry with what becomes the end result. I hope they can reach an agreement that can both save money and make it possible to recruit and retain the best possible military available.

    Just a response to Wilco's post. Not only do local law enforcement have the 20 year retirement, they also have a much higher starting pay scale compared to enlisted service members at the same level. Our local County Sheriff's Department has entry level starting at $68,000.00 per year, raising to $92,000.00 after 4 years. I only know these numbers because my younger son was ready to put in an application if he did not get Active Duty. Add to that the 20 year retirement, I'm not sure you'll find any junior enlisted service member come close to that during 20 years of service.
     
    Last edited: Dec 30, 2014
  15. cb7893

    cb7893 Member

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    This has turned out to be a thoughtful discussion of the issue. My contribution to it can only be to ask questions.

    Does the 20 year retirement lead to careerism? And I am not referring to the enlisted ranks, particularly those with multiple deployments. I am asking about the officer corps.

    Beyond 20, with retirement benefits accruing, does it even become detrimental to overall military policy when those generous (and they are) pension benefits are stacked on top of normal senior management salaries in the defense/national security industry?

    If you haven't read the article which Bruno linked on a separate thread, you should.
     
  16. goaliedad

    goaliedad Parent

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    Exactly!

    Where I work, we have 2 pension plans (actually a 3rd was added this year for new hires - a hybrid which I will comment on later) - a defined benefit (with a minimum retirement age of 60 without age penalty and a formula of 1.5% of salary times years worked and a defined contribution plan (9% of salary employer paid). All hourly employees are required to be in the defined benefit. Exempt have the option of either.

    Very low turnover in hourly employees except in those jobs (no longevity based pay scale here) where people get stuck in the low pay positions (think janitorial).

    Very low turnover in exempt staff with defined benefit despite a 5-year period without raises (including COLA) during the recent downturn.

    Continuous high turnover (about 8x defined benefit turnover) in exempt staff in defined contribution plan.

    It is killing us in the IT area, especially when our payscale (especially since the last downturn) is way lower than the rest of the local market.

    Our new hybrid plan (for new hires starting last July) has a small defined benefit part and a small variable part which requires employee contribution. The kicker is that if the investment performance of the defined benefit isn't yielding enough to fund the plan, they take away from the defined contribution portion to make up the difference. I call it the "Heads they win, Tails you lose" plan. Employer takes zero risk - that was the mission.

    It used to be that we hired 40+ year olds to critical jobs because by that time they recognize that they want some retirement security. And 90% of the 40+ crowd chose the defined benefit plan. 90% of the under 30 crowd takes the defined contribution plan and very few last beyond 5 years, leaving for the shop down the street once they've punched their ticket here.

    I'm in the defined benefit, sticking with the job even though I can add 20+% to my pay at any number of shops in town. The pension means something. As for those people coming behind me in the hybrid plan - it won't mean as much. I'm glad that I won't be working here when those chickens come home to roost.

    And my defined benefit plan is funded in excess of 95% because my employer chooses to recognized deferred costs upfront. If only Congress were required to fund military pensions before upfront before going off to war...
     
  17. MabryPsyD

    MabryPsyD Dr. G.

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    NOOOOOOO!

    I want to retire at 41 and work 2-3 days a week. You're messing with my good vibes!
     
  18. Stealth_81

    Stealth_81 Super Moderator Moderator Founding Member

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    Not a good comparison because there are no law enforcement jobs available without a 4-year degree anymore, at least in my neck of the woods. Even in the fire service they are looking for a bachelors degree for entry-level firefighters. Also, in my department there is no 20 years and done retirement. You can retire at 52 if you have at least 20 years in, but it will not be anywhere near 50% of your final base salary (more like 25%). Most people will have more than 20 years in to retire. I will retire next year at 52 (or maybe in two years at 53, haven't decided, yet) with 27 years of service and I will be looking at a pension in the 35-40% range. Different areas will have different pension plans dependent on what the contract says.

    Stealth_81
     
  19. MedB

    MedB Parent

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    Yeah but at least in the military when you are required to work overtime you get paid extra.... oh wait.

    But in the military if you work holidays you are compensated extra.... oh wait.

    But in the military you can do extra detail work and get paid for things like chaperoning a high school dance.... oh wait.

    Hmm... maybe it might be important to look at "total compensation" afterall?
     
  20. aglages

    aglages Parent

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    Why? In the military you can always quit whenever you want...oh wait.
     

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