A congressionally mandated commission on Thursday called for an overhaul of the military’s compensation and retirement system, recommending changes  so that future service members will contribute to their own retirements and could choose private-sector healthcare plans.

A long-awaited report from the Military Compensation and Retirement Modernization Commission made 15 recommendations that members said would increase the financial options troops have without reducing their overall compensation. The plan would save the U.S. government billions of dollars, but also grandfather in the retirement plans of current active-duty troops and veterans — a sensitive issue for many of those who have served.

“We are confident that implementing these reforms will move the All-Volunteer Force toward a future that is in the best interest of our Nation’s security and that can be fiscally sustained,” the commission said in a letter jointly released with the report. “We believe, for those who serve and have served to uphold the military’s highest traditions and heritage, and the families that support them, the Federal Government must fulfill its obligation with its enduring commitment in war and in peace.”


The commission’s plan calls for the adoption of 401K-style Thift Savings Plan for all future service members while keeping in place the basic principles of the existing system that offers retirement benefits to anyone who has served 20 years. The new blended program would provide some retirement benefits to those who serve just a few years, but also provide new flexibility to the services as they grapple with maintaining the mix of ranks and experiences they want, the commission said.

The report’s release sets the stage for a potentially emotional debate in which proponents of change will highlight the heavy — some would say unmanageable — financial burden on the existing system, while others scrutinize what incentives and entitlements might be in jeopardy for those who have served.

President Obama thanked the commission members in a statement, saying he will closely review its proposals in coming weeks in concert with senior civilian and military leaders.


“I look forward to hearing their views and working with Congress to strengthen and modernize our military compensation and retirement systems,” Obama said.

Defense Secretary Chuck Hagel said in a statement that the Defense Department will analyze the proposals in “full detail.”

“I appreciate that the commission gathered input from over 150,000 service members and veterans across the country before formulating its recommendations,” Hagel said. “I also appreciate the commission’s support for grandfathering current service members and retirees with its recommended changes on retirement pay; its focus on protecting future recruitment and retention; and its attempt to propose savings to ensure our military will be able to field a ready, agile, and modern force capable of meeting present and future threats.”


The nine-member panel was led by Alphonso Maldon Jr., a former Army officer and assistant secretary of defense. Other members included former Sen. J. Robert Kerrey (D.-Neb.), a former Navy SEAL and Medal of Honor recipient; retired Navy Adm. Edmund P. Giambastiani Jr., a former vice chairman of the Joint Chiefs of Staff; and retired Army Gen. Peter W. Chiarelli, who left as his service’s No. 2 officer in 2012. The Senate Armed Services Committee will take up the recommendations in hearings next week.

Here are the recommendations:

1. Reduce base retirement pay, but supplement it with the 401K-style plan and continue to offer full retirement benefits to anyone who has served 20 years.
This is among the most significant and widely discussed changes proposed by the commission. But the panel rejected endorsing more aggressive options that have been discussed, including offering retirement benefits who don’t serve 20 years.


The 20-year retirement system “plays an important role in readiness and retention of the All-Volunteer Force, especially among members who have served 10 or more years,” the commission said in its 280-page report. There’s an existing financial “pull” on mid-career service members that encourages them to stay in and earn a full retirement, the report said.

2. Provide new options for retiring service members to protect their pay for their survivors.
The commission heard numerous complaints from retiring service members that the Survivor Benefit Plan, a program designed to take care of service members’ families after their deaths, is subject to financial penalties as a result of another program run by the Department of Veterans Affairs, the VA Dependency and Indemnity Compensation.

The commission recommended developing a new survivor benefit that is not subject to the financial offset because of the VA plan, but keeping the existing plan as a cheaper option for service members.


3. Promote “financial literacy” in service members by offering more training.
Only 12 percent of service members surveyed received financial information from their command, according to a 2013 Blue Star Families survey cited by the commission. That increases the likelihood they make bad financial choices, like signing up for predatory loans, the commission said.

4. Fix the pay system for reserve service members.
The existing system leads is too complicated, with 30 different ways under which a reservist can be called to duty, the commission said. It recommended streamlining the system, and said doing so would allow the military to budget better and cut down on service members not receiving their pay in a timely fashion.

5. Maintain medical capabilities developed during wartime, and create a new four-star command to oversee them.
The commission raised concerns that with combat operations for the military dwindling, it could be difficult to retain medical expertise learned in Iraq and Afghanistan. Top defense officials should develop dedicated oversight of medical readiness through a new joint readiness command, members said.


“Although there has been substantial advances in combat medical care, there remains no central oversight of the medical evacuation mission, the training requirements necessary to maintain the newly developed capabilities during peacetime, or the research and development necessary to expand forward surgical capabilities,” the commission said

6. Eliminate Tricare, the military’s healthcare program, and replace it with a plan with more options for troops.
The existing system limits access to care by limiting service members to a “lengthy and frustrating process” for obtaining specialty care. The replacement should open up more commercial insurance plans as options, and include a fund to assist troops who have chronic or catastrophic conditions, the commission said.

The change would not apply to Tricare for Life, which retired service members use now to supplement Medicare benefits.


7. Improve care for the children of service members with special needs.
The commission found that the services provide substantial support to the families of service members who have special needs, but that state programs differ widely and cause problems for some military families.

“Service members often lose access to these state-based programs when they move between duty stations because of long waiting lists in some states,” the commission said, recommending an expansion to include services that are currently provided through state Medicaid waiver programs.

8. Require new collaboration between VA and the Defense Department on healthcare issues.
The commission found that while the two departments spend massive amounts of money on healthcare, there are still a variety of problems that disrupt care for service members and veterans. In one example, the commission said, recent veterans sometimes face disruptions in their prescriptions as they leave the military.


“Medical information cannot yet be shared seamlessly between DoD and VA, hindering effective care for service members,” the commission said.

9. Keep retail stores on military bases with cheap merchandise and food, but streamline the system.
The Defense Department currently operates a variety of stores, known as commissaries and exchanges, that sell everything from clothing to milk and eggs at reasonable prices. That’s especially helpful in remote areas where there are few stores, or overseas.

The commission recommended keeping the stores, but merging the commissary and exchange systems into one program.

“The merger of many back-end operation and support functions, alignment of incentives and policies, and consistent implementation of best practices should achieve significant efficiencies while maintaining the value of the benefits for service members and their families,” the commission said.

10. Improve child care on military bases, in part by reducing waiting lists.
The demand for child care on military bases far exceeds availability, the commission found. More than 11,000 children were on waiting lists as of September 2014.

The commission recommended allowing the Pentagon to authorize construction projects of up to $15 million to build new facilities, and requiring the Defense Department to better track wait times.

11. Keep the Post-9/11 GI Bill, but makes changes to it and eliminate other options.
The modern version of the GI Bill is by far more generous than earlier programs like the Montgomery GI Bill. The commission recommended making the new educational benefits program the sole option, while altering the details under which service members can transfer their benefits to dependents.

The current bill allows service members to transfer their GI Bill benefits — which includes tuition to any public college in their state — to a family member after serving for six years as long as they commit to another four. That is “somewhat misaligned with retention goals” for the military, the commission said.

The commission recommends requiring service members to be in the military for 10 years and and stay for an additional two instead.

12. Expand programs for service members leaving the military.
More than 21 percent of veterans who are between 18 and 24 years old are unemployed, compared to 14.3 percent of their peers who didn’t serve. The commission recommended addressing that by requiring service members to attend a transition-assistance program designed for future college students.

It also recommends mandating that employees working for the Department of Labor’s one-stop career centers also attend military transition-assistance classes “to develop personal connections between transitioning veterans and One-Stop Career Centers,” the commission’s report said.

13. Streamline food-assistance programs for troops.
Some service members with large families are eligible for food stamps through the Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP). The military offers an alternative option known as the Family Subsistence Supplemental Allowance, but it was used by just 285 service members in fiscal 2013, the commission found.

The commission recommended making food stamps the sole way the service members receive help purchasing food in America, but keeping the military’s program for service members who are overseas.

14. More plane rides for military family members.
Military family members are eligible to fly on military aircraft on a space-available basis when their service member is deployed for more than 120 days. Shorter deployments are becoming more routine, however, leading the commission to recommend opening access to space-available flights to anyone whose family member has been deployed for 30 days. Doing so is a quality of life issue, the commission said.

15. Measure and track how military life affects children in school.
Children of service members are not identified in nationwide reporting on student performance, even though they live a unique lifestyle with a variety of stresses, the commission noted. It recommended adding one in federal reporting to assess how frequently relocating and other issues affect military families.