It first drew laughter, then applause, from the audience, according to the Defense Department transcript.
Panetta, a politician and former budget director, did the normal non-response response: “My approach to it has been to say, let’s look at every area to see whether or not we can make the important reforms, et cetera.”
But he got more specific, using the example of young people who join the military and then leave after a four-year tour.
“Right now,” Panetta said, “under the present system, they get nothing. So there is some thought that maybe they’re entitled to some retirement to be able to move those funds to other systems. I think that’s worth looking at.”
Once into the subject, Panetta showed that he understood where he had stepped and quickly added, “My view is we ought not to break faith with those that serve, that serve now and that if there were any changes that were to be made in the future, it would not . . . happen without grandfathering their benefits.”
Former defense secretary Robert M. Gates, who took a few spears for proposing increased retiree payments for health care, only gave passing reference to the need for retirement pay reform. He left it to the Defense Business Board to study this issue and make final recommendations, which Panetta is to receive shortly.
The board, made up of private-sector corporate officials often involved with defense business, does studies and provides advice to the defense secretary. Its findings after studying the military retirement system got far less publicity July 21 than its initial suggestion that the Pentagon adopt a new 401(k)-type plan based on the existing military personnel thrift savings plan.
The board’s findings are rooted in some startling facts. “Military retirement [plans] exceeds levels in the private sector” because they pay retirees immediately after 20 years of service [not waiting to age 60 or 65] at a higher percentage of their annual pay, which “has no comparison in the private sector.”
It calls the retirement plan “unfair” because “83 percent of those who serve will receive no retirement pay,” meaning those who serve five, 10 or 15 years. Risk or combat roles play no part in determining retirement eligibility, except for those who suffer disabling wounds or injuries.
Those in that minority who go for 20 years or more “are endowed with a lifetime benefit.” Perhaps more damning, “most of the troops engaged in combat serve far less than the required 20 years,” with the result that only “12 percent to 13 percent of enlisted troops earn retirement pay.”