Defense Secretary Leon E. Panetta (Alex Wong/GETTY IMAGES)

Speaking at a House hearing on military budget issues, Panetta said any proposals to cut more than roughly $450 million from the Pentagon budget in the next decade would be devastating.

“I don’t say it as a scare tactic, don’t say it as a threat,” Panetta told members of the House Armed Services Committee. “It’s a reality.”

Regarding potential changes to the military’s retirement system, Panetta conceded: “I’ve got to put everything on the table and take a look at it. And compensation in the retirement area is one of those.”

“But at the same time, I’ve made very clear that we can’t break faith with those in the service,” Panetta added. “We’ve made a promise to people who are on duty that we’re going to provide a certain level of retirement. We’re not going to back away from that. We’ve got to maintain that promise. Those people have been deployed time and time again. They’ve put their lives on the line on the battlefield. And we’re not — we’re not going to pull the rug out from under them. We’re going to -- we’re going to stand by the promise that was made to them.”

One thing the Defense Department might consider is finding a way to give retirement benefits for troops who leave after 12 to 15 years of service. Currently, service members who retire after 20 years of service receive 50 percent of their pay, with the percentage increasing depending on any additional years. About 13 percent of enlisted service members make it to the 20-year mark, according to

Also testifying at the hearing, Joint Chiefs of Staff Chairman Gen. Martin E. Dempsey agreed that changes to military retirement programs may be necessary, but insisted that the nature of military service — and the unique requirement to move several times over the course of a career — means military retirement programs should not be compared to or modeled on civilian federal worker retirement accounts.

“We can figure it out. We need the time to do so,” Dempsey said. “If it’s unaffordable, we’ll react. But I want to reject outright the idea that somehow my retirement program...should be compared to someone else’s.”

Deficit reduction plans put forth by President Obama last month would increase pharmacy co-payments for military beneficiaries and establish a first-ever annual fee in the military’s Tricare for Life health benefits for Medicare-eligible retirees. The White House wants to raise Tricare pharmacy co-payments closer to parity with federal employee health plans such as BlueCross BlueShield. The increased co-payments, which the White House estimates would save $20.6 billion over 10 years, excludes active-duty members but would affect their families and all military retirees.

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

Military TRICARE costs could increase

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