Obama calls for changes to Military Benefits: Wants Current Troops to be “Grandfathered”

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By Debbie Gregory.

Total military compensation now eats up about one-third of the Defense Department’s budget. Earlier this month in a letter to Congress, President Obama announced that military pay increases will be capped at 1%, instead of the 1.8%  that the House had approved.

Finding more ways to cut spending, law makers, including President Obama, are considering restructuring the military’s retirement and compensation system. The president gave instructions to the Military Retirement and Compensation Modernization Commission, a task force created by Congress, which informed its members to begin efforts to overhaul the current military pay and benefits scheme. The commission will focus on retirement, the military’s current promotion system, and force shaping tools.

Some of the proposed changes to retirement include those that would give limited retirement benefits to service members who leave the military before reaching the 20-year mark. Under the current retirement rules, service members who leave before serving 20 years of service are not eligible for retirement benefits.

These alternative programs may be attractive to younger recruits who may wish to only serve five or ten years and separate with a limited retirement benefit.

On September 12, in a letter to the commission, President Obama stated that his wish is that all service members currently serving and all retirees who are currently receiving benefits be grandfathered under the current plan, if they choose.

“The Commission’s recommendations for change must grandfather any currently serving members and current retirees in the current military retirement systems, but may allow current service members and current retirees the choice to change to your proposed retirement system,” the letter said.

The most forthright opponents to these changes, not surprisingly, come from the retired military community. In an August 8th letter to the Military Officers Associating of America, Retired Air Force Colonel Mike Hayden gave his stance on the impending proposed changes.

“You could characterize this as a divide-and-conquer-type strategy. Eliminate current retirees as well as all the currently serving troops who intend to stay for a career from the affected pool, and you limit the backlash,” Hayden wrote.

Hayden’s letter goes on to say, “Overhauling retirement — the very system needed to entice troops to endure levels of sacrifice most citizens are unwilling to accept for even one tour of duty, let alone for two or three decades — is crazy.”

Military personnel costs have nearly doubled since 2001. This is partly due to soaring health care costs, and compensation raises that Congress approved when troops were facing repeated deployments to Iraq and Afghanistan in support of the Global War on Terror.

Congress has ordered the Pentagon to submit their recommendations to the task force by November. A final report is due to the White House on May 1, 2014. The report could very well lead to new legislation that may include substantive changes to the military’s retirement and compensation system.