Battle over Military Pay

[LineInTheSand]

LITS, how "SHOULD" the retirement system and benefits change?
I'll agree that we could do better for the ~83% that don't do 20+. I do think it would be a bad idea to reduce the 20+yr retirement benefits from currently serving members. I'm in that category, admittedly, but I also think reforms in things like SS and Medicare should be implemented in the long term, rather than changing "the deal" for people already in the system.

First, I would remove the 20 year automatic retirement. I think it provides an incentive that doesn't translate into better service to the nation or better leadership within the services. I don't have the numbers, but I'd love to see the voluntary separations at 15 years, compared to 25 years.... or maybe a finer point, at 19 years and at 21 years. I would guess, without any data to support this, that there is a HUGE difference. "No duh LITS" you say... but how does this difference serve the nation or the individuals who serve? It doesn't. Not at all.

Second, I would provide an "opt in" 401(k) program, when folks first enter. You can decide the percentage, but it would include matching contributions. The federal government already does this with civilian employees. I think my ex-wife had 100% matching up to 3 or 5% and 50% matching up to 7 or 9%. Some places (like my employer) keep in at that number. I contribute 7% of my salary, my employer contributes 7%, and that's how it will always be while I work here. At another organization, it's 7% matching for the first 5 years of employment, and then I think it jumps to 9% matching.

This will do two things, first, it will require (if they want to) service members to have "skin" in their retirement, from the very beginning. It will reinforce the concept of saving. It will also give them SOME money in retirement savings, when they separate.... no matter if the separation is voluntary, as a result of force reductions, or involuntary. They put money in, it was matched, and no matter when they leave, they aren't just kicked to the curve before 20 years. Second, this will give service members a taste of how their benefits/retirement will likely work when they get out to the real world. They'll understand a portion of their paycheck will go to retirement, and they'll budget for that reality.

Now MAYBE you grandfather in current service members who have either entered service or who have hit 20 years or are retired. But like "civil service" civlian employees, those benefits end with them. New members of the military pay in, and reap the benefits, no matter when they leave. They can't do both.... they can't have matching contributions AND pull retirement at 20 years.

And I think finally, with the 20 year mark removed, you look at an appropriate retirement age. Maybe it's like the private sector. Maybe you raise the age in the military now. "Retiring" at 38 years old or 40 years old is CRAZY. It's not based in any kind of reality. None.

 

[LineInTheSand]

With all due respect, I believe you are off base on this particular point. I'm not sure how many people you supervise in your current civilian role, or what your annual compensation budget is that you have to manage; so I grant that perhaps your experiences are different than mine. But as someone with decades of experience in the field and currently leading a revamp of the recruiting strategy for a global corporation; I can tell you that you absolutely do consider retirement and other benefits as part of the total compensation package.

Again, "compensation package" and "pay" are not the same thing. Spinning them that way is dishonest. On job applications you have a "desired pay" area.... not a "desired compensation" area. Yes, I totally agree that compensation packages are a big draw.

But what you need to understand is, the optics of "fight over military compensation packages" won't move the country.... "military pay" however is a headline that makes us think the military members are getting "pay cuts".... they aren't. In fact.... marching all of the compensations would really hurt that argument. Heck, just post the Air Force pilot bonuses.... even within the services you're going to lose a lot of supporters.

 

[Boozebin]

First, I would remove the 20 year automatic retirement. I think it provides an incentive that doesn't translate into better service to the nation or better leadership within the services. I don't have the numbers, but I'd love to see the voluntary separations at 15 years, compared to 25 years.... or maybe a finer point, at 19 years and at 21 years. I would guess, without any data to support this, that there is a HUGE difference. "No duh LITS" you say... but how does this difference serve the nation or the individuals who serve? It doesn't. Not at all.

Second, I would provide an "opt in" 401(k) program, when folks first enter. You can decide the percentage, but it would include matching contributions. The federal government already does this with civilian employees. I think my ex-wife had 100% matching up to 3 or 5% and 50% matching up to 7 or 9%. Some places (like my employer) keep in at that number. I contribute 7% of my salary, my employer contributes 7%, and that's how it will always be while I work here. At another organization, it's 7% matching for the first 5 years of employment, and then I think it jumps to 9% matching.

This will do two things, first, it will require (if they want to) service members to have "skin" in their retirement, from the very beginning. It will reinforce the concept of saving. It will also give them SOME money in retirement savings, when they separate.... no matter if the separation is voluntary, as a result of force reductions, or involuntary. They put money in, it was matched, and no matter when they leave, they aren't just kicked to the curve before 20 years. Second, this will give service members a taste of how their benefits/retirement will likely work when they get out to the real world. They'll understand a portion of their paycheck will go to retirement, and they'll budget for that reality.

Now MAYBE you grandfather in current service members who have either entered service or who have hit 20 years or are retired. But like "civil service" civlian employees, those benefits end with them. New members of the military pay in, and reap the benefits, no matter when they leave. They can't do both.... they can't have matching contributions AND pull retirement at 20 years.

And I think finally, with the 20 year mark removed, you look at an appropriate retirement age. Maybe it's like the private sector. Maybe you raise the age in the military now. "Retiring" at 38 years old or 40 years old is CRAZY. It's not based in any kind of reality. None.

LITS I like points you've made but you only addressed the pay side of things what about the other benefits you receive at 20 such as medical care. Would you give the 20 year person that benefit after 20 or just get rid of it? At what point in a military career do we say as a nation we should care for the individual medically (outside of get injured in the line of duty)?

I dont' want to go down the rabbit hole about how many aches and pains people report to juice the system when they get out. I just want to know if this is on the table for discussion as well for the overall retirement discussion.

 

[MemberLG]

. . .
Where we (hopefully) can find common ground, is that IF we want to change the compensation system for the military, then we owe it to them and their families to look at the entire pie and not just focus on the one piece that we may have an issue with. There must be balance... that is the right thing to do for those that serve our nation and allow us to pontificate (me too) about how things should be from our safe and warm homes while they stand watch.

We disagree on the details, but have a common ground.

My two cents, current military compensation system has a good foundation - base pay, BAS, BAH, pay increase based on rank and years of service, free health care, additional pay during deployment (family separation, combat pay, tax exempt), dislocation allowance for PCS moves, a retirement plan, and etc. The challenge is how to improve them and don't break the bank.

My opinion, the current pay is what it is. Pay associated with deployments could increase and be more customized. For retirement plan, adopt something similiar to the Federal Employees (TSP contribution and matching, retirement vested after 5 years, payments are defferred until age 62 unless your qualify for immediate payment, most most federal employee, voluntary retirement requires retiring minimum retire age, around 57 and 30 years of service). So for the military it could be something like TSP contribution and matching to account for members not staying until qualifying for retirement, and volunteary retirement based on rank, something like for E7/04 and below 20 years, E8/O5, 24 years, E9/O6 and up 26 years. Of course, I haven't done the math to see if this proposal will cost more or not.

 

[MedB]

My two cents, current military compensation system has a good foundation -<snip> - The challenge is how to improve them and don't break the bank.

100% with you on both counts! And your ideas (and Lits's btw) about revising and modernizing the retirement system are good discussions.

My take, for whatever it's worth, is that we should keep in mind however that those revisions should still result in a "richer" retirement benefit for the vet than similar level civilian employment might offer.... unless we balance the scales on other side and remove/revise some of the trade-offs our military members and families make/have made that sometimes get overlooked.

 

[LineInTheSand]

LITS I like points you've made but you only addressed the pay side of things what about the other benefits you receive at 20 such as medical care. Would you give the 20 year person that benefit after 20 or just get rid of it? At what point in a military career do we say as a nation we should care for the individual medically (outside of get injured in the line of duty)?

I dont' want to go down the rabbit hole about how many aches and pains people report to juice the system when they get out. I just want to know if this is on the table for discussion as well for the overall retirement discussion.

Keep and get rid of. The military can ask its members to do some pretty crazy things. Sometimes those crazy things can hurt you. I wouldn't require the 20 year point for this though.

First, at what other employer can you leave, and have them continue to cover your healthcare? Unless you won a lawsuit, I can't think of one. But you're also asked to do crazy things that could hurt you.

If you have a service related/connected injury, that should be covered. So, LITS breaks his pinky.... should he get coverage for life? No. If LITS injury is such that it requires lifelong care and monitoring, then it should be covered by the military, via the VA. If LITS's single injury is not such, that it requires lifelong care, BUT LITS has a number of injuries, that in total affects his future life and employability, then yes, that should be covered too. Maybe that would involve tweeking the disability points. Come up with a percentage that would trigger this, maybe 25% or 50% or 100%, and cover that person.

I see no reason why someone who served for 20 years is entitled to lifelong care.... just for serving 20 years, unless, during that service, something happened that should be covered.

Now what I'm talking about is post service.... during service it makes sense for service members to get benefits.... like allowances that aren't taxed, different pay for certain situations, free healthcare, etc. Those are certainly incentives as well. And I think these things are attractive. Flight pay, combat pay, income that isn't taxed, hazard pay, etc. We entered Port Au Prince, Haiti, on the 31st of the month, and the 1st of the next month and pulled hazard pay for both months. Want to play under the turning rotors of a helo on the rolling deck of a ship? Extra pay. Want to serve in a war zone... your pay won't be taxed. Tear your shoulder playing ice hockey while your on active duty? Have you surgery paid for, and PT too.

I never worked for free. The entire time I served I was paid. I was paid pretty well, which isn't something I appreciated until I transitioned to the private sector. I got regular pay increases, knew when promotions were expected, knew every 2-4 years I would move, knew my moves would be paid for, and that I would end up in a place with a pretty sweet basic allowance for housing. I knew I could keep my legal residence in a state I hadn't lived in in years (a state without a state income tax, of course) and I knew that the Post 9/11 GI Bill and federal hiring preference was waiting for me.

And then I left.... and I found out that I needed to save for retirement. And I found out what it feels like to have 100% of my paycheck taxed, and what it's like to have to pay taxes in the state I'm in, and what it's like to find a doctor near me (who accepts my insurance) and that I can't just go to the doctor whenever I want. I found out that when I get sick, I use a vacation day.... I don't just get a SIC note from a military doctor. I found out you don't know when you'll get a raise or a promotion or if your job will be around in 1 year, 5 years or 10 years.

In fairness, I'm not retired, so maybe I'm more willing to part with the current military retirement system that those who stand to benefit from it... but that's a perspective that's probably needed too.

The vast majority, 83% I believe was quoted above, leave the military with little to no benefits. They enter a would will little or no long term savings (or certainly not savings with contributions from their employer) and they have to relearn alot.

The military's system isn't superior to the private sector's. The military benefits from a large pot of money, from a source with deep pockets (made deeper by a money printing press). But that benefit is also its downfall, because these benefits, which are technically liabilities, are growing, and as they grow, that personel costs will affect the readiness of the services. The more money that goes to individuals who no longer serve, the less money going to our current service members, their training, and their gear.