Pentagon proposes reform of U.S. military
retirement system
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[June 11, 2015]
By David Alexander
WASHINGTON (Reuters) - The Pentagon on
Wednesday proposed a reform of its retirement system, which would cut
guaranteed benefits for those who serve 20 years while boosting
retention pay and adding a retirement savings plan to ensure most troops
can leave with a benefit.
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Army Colonel Steve Warren, a Pentagon spokesman, said the proposal
submitted to Congress would "achieve real tangible savings" of $8.1
billion over 10 years for the Defense Department.
Under the current military retirement system, troops who serve at
least 20 years can retire with an annual benefit roughly equal to
half pay. Those who retire before reaching 20 years service receive
no retirement benefit.
Under the proposal sent to Congress, troops who serve for 20 years
or more would receive a defined benefit annuity that would be
equivalent to about 80 percent of the current pension scheme, or
about 40 percent of retirement salary.
They also would be eligible for so-called "continuation pay" aimed
at encouraging them to remain after eight years in the military. The
continuation pay would offset some of the reduction in the defined
benefit.
All troops entering the service also would be enrolled in a
retirement savings plan, which would receive a minimum Pentagon
contribution of 1 percent of base pay.
![](http://archives.lincolndailynews.com/2015/Jun/11/images/ads/current/pest_control_bch_092414.png) Service members would be able to contribute to the plan from their
salaries, with the Pentagon matching up to 5 percent of base pay
after four years of service.
Current service members could opt to stick with their current
retirement plan. But beginning in 2018, the new plan, if approved by
Congress, would become mandatory for new service members.
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![](http://archives.lincolndailynews.com/2015/Jun/11/images/ads/current/coyne_lda2_071113.png)
The current system has been criticized for being out-of-step with
retirement schemes offered by other employers, which are portable
and allow workers to take retirement savings with them when they
switch jobs.
"This proposal includes elements that the department believes are
necessary to promote retention, maintain the all-volunteer force and
protect service members who retire due to disability," said Army
Colonel Steve Warren, a Pentagon spokesman.
The Pentagon settled on the new system after reviewing retirement
proposals by the U.S. House of Representatives and Senate as well as
a military retirement commission that issued its findings earlier
this year.
Navy Lieutenant Commander Nate Christensen, another Pentagon
spokesman, said the new plan would mean about 85 percent of all
troops leaving the service would receive some form of retirement of
benefit to take with them.
(Reporting by David Alexander; Editing by David Gregorio)
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