Military retirement plan not ‘unaffordable,’ defense official says

October 25, 2011

A senior defense official told a congressional panel Tuesday that the current military retirement system is “neither unaffordable nor spiraling out of control, as some would contend,” and cautioned against proposals to replace it with a private-sector-style plan.

Jo Ann Rooney, the principal deputy undersecretary of defense for personnel and readiness, told a House Armed Services subcommittee Tuesday that private-sector models “may not necessarily be the proper approach for the military.”

The Defense Business Board, a Pentagon advisory board, issued a report this summer suggesting that the military consider replacing the retirement system with a 401(k)-style plan. Under the current system, a service member must complete 20 years of active duty or equivalent service to qualify for retirement benefits.

Rooney noted that unlike the private sector, the military services must grow most of their workforce from within. It generally takes 15 to 20 years to develop an infantry battalion commander or a submarine captain. Defense Department policies need to “foster greater retention and longer careers” than in the private sector, Rooney said.

But defense officials are also considering arguments that some aspects of a 401(k)-style plan might attract a new generation of men and women to the military, allowing them to receive some benefits after a few years of service, according to Vee Penrod, deputy assistant secretary of defense for military personnel policy.

“The department is working to strike the right balance,” Rooney said.

Under the current policy, 83 percent of former service members receive no pension because they did not serve 20 years, and some members of the Subcommittee on Military Personnel spoke in favor of changes that would allow future service members to qualify for pensions sooner.

“We do need to remember those 83 percent — I see nothing wrong with their being able to choose a different retirement program on their own will,” said Rep. Austin Scott (R-Ga.)

The White House announced plans last month to establish a board similar to the base closure and realignment commission (BRAC) to make long-term changes to the military retirement system.

The deficit-reduction plan put forth by the Obama administration described the military retirement system as “out of line with most other government or private retirement plans.”

The proposals to make military retirement more akin to the private sector have been fiercely criticized by military groups, which note that the past decade of war has seen a small percentage of Americans deployed many times to combat. “We find it shockingly insensitive,” Steve Strobridge, co-chairman of the Military Coalition, a consortium of 34 organizations representing veterans and the uniformed services, told the subcommittee.

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