A presidential commission tentatively agreed yesterday to recommend a new military retirement system that would reduce benefits for men and women retiring after 20 years but for the first time would provide benefits to those who leave before serving 20 years.
The president's Commission on Military Compensation did not spell out precisely how much the retirement benefits of 20 year veterans might be cut or how much those serving less might receive. When the commission is finished, it will send the retirement proposal to President Carter, who then can ask Congress to approve any changed in the present system.
That system allows military personnel to retire at half pay after 20 years, or at three quarters pay after 30. It has been roundly criticized both in Congress and Pentagon because of its cost - $10.2 billion a year at present, an expected $35.7 billion by the end of the century.
In its place, the commission proposes a three pronged retirement system consisting of an annuity plan, a deferred compensation plan, and an expanded provision for severance pay.
Final details of the annuity and deferred compensation plans have not yet been put in place. However, the commission staff estimates that if the new system were fully implemented, serving the same number of retired personnel as this year savings would range from 29 percent - about $3 billion this year - to 39 per cent.
The biggest winners under the tentative new proposal would be those enlisted personnel and officers who do not make a career of military life. The big losers, by contrast, would be the people the current system is designed to benefit most - those who wait at least 20 years to retire. Their benefits would be cut by a yet-undecided amount.
"Compared to the current system, it looks like we're taking a lot away," said Commission Chairman Charles J. Zwick, president of a $4 billion Florida bank holding company.
However, Zwick said, the deferred compensation fund will probably make make up for much of the apparent loss of benefits.
Persons now serving in the military would receive benefits based on the existing system. The commission will decide later whether to offer current personnel the option retiring under the present system, the proposed system, or some combination of the two.
Here's how the new system would work:
The severance pay now reserved for officers would be extended to officers and enlisted personnel who are involuntarily retired. Personnel would receive one quarter of a month's pay for each of the first 10 uears, in the service, plus one half of a month's pay for each of the next 10 years, but could receive no more than the yearly salary at the time of severance.
The deferred compensation portion of the plan would provide former military personnel a regular source of income for the period between their retirement and eligibility for the old age annuity.
Beginning in the sixth year of service, the government would begin paying into a fund a potion of the service person's salary. In the tenth year, the service person would become eligible to begin collecting the money. One of the largest tasks remaining for the commission is to decide how much the government will contribute to the fund, and how service personnel may take money out of it.
The old age annuity would follow the basic outlines of the civil service retirement system. Personnel with 30 years of service would be eligible for benefits at age 55; those with 20 years of service at age 60, and those with between 10 and 20 years at age 62.
Although full details of the proposals have not been worked out, commissions staffers provided qualified estimates of the way the proposed system would change the benefits of a sergeant who retired voluntarily after 20 years.
Under the current system, the sergeant would get about $5,800 a year for life. When he turned 65, Social Security benefits would raise his income to $12,830 a year. If he retired before serving 20 years, he would get no military pension. Under the proposed new system, he would get the deferred compensation - the part of the package whose amounts have not yet been agreed on by the commission - for the years between his retirement and age 60.
Between ages 60 and 65, he would receive $5,120 a year from the old age annuity. His military benefit would be reduced when he became eligible for Social Security - a new commission proposal - bringing his yearly take to $10,400, including the Social Security benefit.
If the sergeant retired after 15 years under the new proposal, he would receive the money in his deferred compensation account, and at age annuity. As in the previous example, the annuity would be reduced when he became eligible for Social security benefits at 65.
The new proposal would eliminate the much criticized practice of "double dipping" - working full time for the government while drawing military pensions.
The deferred compensation would be awarded regardless of where the former service persons worked asfter leaving the military. But they would not be permitted to receive their military old age annuities while working for the civil service.
Instead, they would be given the option of credition their military service to the civil service system, and receiving a civil service annuities based on their combined military and civil service experience, or crediting their years in the civil service to the military system, and receiving a military annuity based on the combined yearsof service.