The Defense Business Board (motto: “Business Excellence in Defense of the Nation”), a panel of corporate types who advise the Pentagon’s civilian leadership, has trained its sights on a problem that urgently needs fixing: the military retirement system.
Didn’t know it was broken? Well, a recent DBB study concludes that military benefits are “more generous and expensive” than those available in the private sector, and have therefore become “unaffordable” and “unfair.” Created back when military skills did not easily translate into civilian second careers, the system is also unnecessary, the study argues. And with retirees no longer dying as quickly as they once did, it’s inconvenient to boot.
With the Pentagon facing growing pressure to tighten its belt, the DBB wants to lift a page out of the corporate playbook: “renegotiate” (a euphemism for “reduce”) the benefits package to which the workforce has become accustomed. Of course, the workforce in this case has spent the past decade not pulling shifts on an assembly line or toiling in badly lit cubicles, but rotating between various theaters of war. Remember the old saying “What’s good for General Motors is good for the country”? The updated DBB version should go like this: “What’s good enough for GM employees ought to be good enough for American soldiers.”
What exactly has attracted the DBB’s ire? Put simply, the retirement system promises military members half of their pay for life in exchange for 20 years of service, with the percentage of money increasing incrementally for those who serve more than 20 years. In its place, the DBB advocates a 401(k)-type arrangement with service members and the government both kicking in contributions. (The proposal would have no effect on members who, like me, have already retired.)
From the Pentagon’s point of view, the plan offers two advantages. First, it promises to save money. Employing what we might call the Afghanistan cost metric (an ACM is the monthly bill for waging the Afghan war, which the Pentagon estimates at $10 billion), military retirees set the government back five ACMs per year. By 2035, absent action taken to reduce these costs, the present system will consume 11 ACMs — almost what it costs to fight in Afghanistan for a single year. According to the DBB, that would “seriously erode future military capabilities” — and indeed could make future wars on the scale of Afghanistan too pricey to undertake.
To avert this troubling prospect, the DBB wants the Pentagon to jettison the concept of a lifelong retirement pension. In its place, the board would institute a tax-sheltered savings account to accompany service members into the post-military workplace. Counting on civilian employers to contribute to that account, while stipulating that benefits would be “payable at age 60 to 65” rather than at 40 or 45, would reduce the money that the Pentagon is obliged to set aside. In effect, providing for Capt. Smith’s retirement would become an individual responsibility, shared by however many employers Smith could induce to pitch in — not a responsibility that the Pentagon alone would have to bear. Less money added to retirement accounts would mean more money for the stuff that matters: wars and weapons.