White House punts on military retirement reforms, House presses for changes

The Obama Administration and a key House committee reached different conclusions Thursday about reforming military retirement, with the White House saying the issue needs more analysis and the House Armed Services Committee voting to adopt most of the reforms a blue ribbon panel already recommended after an exhaustive study.

All told, the White House said it was ready to back 10 of the 15 recommendations the Military Compensation and Retirement Modernization Commission made in January. But the report the President sent to Congress — already a month late — said several issues, including proposed overhauls of DoD’s health insurance system and military retirement, still required more examination.

“The choices we face about military compensation are both vexing and critically important,” Defense Secretary Ashton Carter said in a statement. “DoD will continue to work closely with the Congress and the commission to achieve the goals we share: ensuring the long-term strength and vitality of our all- volunteer force, and honoring all of our servicemembers — past, present, and future.”

But with regard to military retirement, members of the House Armed Services Committee were of the opinion that the issue has already been studied to death. So by an overwhelming margin, the panel voted early Thursday morning to include most of the commission’s retirement reforms in this year’s defense authorization bill.

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The commission, which spent nearly two years examining military pay and benefits, recommended that the military move to a “blended” system which keeps its 20-year pension system in place, but with a reduction in the defined pension benefit. To offset that cut, DoD would make contributions into military members’ Thrift Savings Plan accounts, letting them start to accrue at least some retirement savings from the first day they begin service.

The commission’s projections indicate that besides giving retirement benefits to more service members, investment returns from the TSP would more than make up for future retirees’ reduced pensions.

“There has been concern for some time about whether a system where you don’t get a dime of retirement unless you stay in the military for 20 years is going to enable us to attract and keep the kind of people we need in the military,” said Rep. Mac Thornberry (R-Texas), the chairman of the House Armed Services Committee. 83 percent of the people who serve in the military leave without a dime of retirement. If you serve for 19 years, you get not a dime of retirement.”

The legislation the committee passed early Thursday morning accepted most of the compensation commission’s retirement proposal as-is, with a few caveats: implementation of the new system would be delayed until October 2017 in order to give DoD time to raise red flags about any unforeseen pitfalls associated with the new approach. The House language also omits a commission recommendation to let military members receive part of their pensions in one lump sum, and requires the government to continue making matching contributions to the Thrift Savings Plan even after a service member is eligible to retire.

“We’ve taken into consideration the concerns that many of the veterans’ service organizations expressed about losing senior enlisted troops after 20 years of service, so unlike the commission, we’re telling DoD to continue the match past 20 years,” said Rep. Joe Heck (R- Nev.), the chairman of the House’s personnel subcommittee.

“We’re also taking out the lump sum payments because some people think that puts a service member’s retirement funds at risk. But overall, what we’re saying to DoD is that they need to take the recommendations we’ve spelled out in the bill, come back to us with an implementation plan and identify any challenges you might see by next year so that we can redirect course if we need to. But we continue to march toward an implementation date of 2017.”

But a handful of House members voiced trepidations similar to the ones the administration expressed Thursday.

One intensely-debated amendment offered by Rep Chris Gibson (R-N.Y.), a retired Army colonel, would have stricken retirement reform from this year’s defense bill and replaced it with request to the Defense Department for additional feedback on the commission’ recommendations.

“The veterans organizations are split on this proposal right now. And if we spend the next year listening to our service members and families, we’re going to be in a position next year to legislate from a position of strength and consensus with a full understanding of what we’re doing,” Gibson said. “Let’s be candid here: this is a vote to cut retirement at 20 years. It may be the case that people feel that the TSP will make up that reduction, but when this bill gets to the floor, our colleagues are going to be surprised that they’re looking at a vote that’s going to cut retirement. I think there are ways to explain what we’re doing and make this more understandable, and I think this is premature.”

But there was widespread opposition to Gibson’s amendment. Members voted it down by a vote of 55-8.

“We could study this indefinitely, and that’s what’s happened so far,” Thornberry said. “Or, we could take a step that builds on what the commission has recommended and then continue to listen to the service chiefs, the VSOs and others about how to fine-tune it. We can do that all the way through this year’s defense authorization process, and then we’ve got another year to make further adjustments before it takes effect. But human nature being what it is, members of the military are not going to focus on these changes until they’re real. We need to make it real, and if we need to adjust things to get it right, we will. It makes no sense whatsoever to delay this further. In effect, you’re just going to kill it.”

Support for advancing the compensation commission’s retirement changes ahead was also bipartisan.

“We’ve been talking and theorizing and studying about the military retirement system for as long as I’ve been in Congress,” said Rep. Adam Smith (D-Wash.), the committee’s ranking Democrat. “Arguing that we need more time just boggles my mind. You can always argue that doing something legislatively is a bad idea because you might want to change something later. But if that’s a winning argument, we should shut down the Congress and never pass anything again. We have looked at this issue over and over again. I just don’t see any merit to the argument that we haven’t studied it properly or talked to the service members properly.”

Retirement reform was one of the most substantial changes the commission recommended after more than 70 hearings, meetings and visits to local military installations.

The panel also conducted an exhaustive survey of current service members and found that 53 percent would prefer the alternative retirement plan; 46 percent were in favor of leaving the system as it is.

The bill the House committee passed Thursday did not take up the issue of reforms to military health insurance. The compensation commission had recommended that Congress mostly scrap the current TRICARE system and replace it with a menu of private health insurance options that would similar to but separate from the Federal Employee Health Benefits Plan.

However, the House legislation would make several other changes to military health care, including ordering the department to combine the military services’ medical organizations into a unified command and creating a shared drug formulary between DoD and the Department of Veterans Affairs to ensure that veterans continue to have access to the same medications they were prescribed while they were still in uniform.

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