Pentagon Disputes Proposal To Cut Military Retirement Pay
The Pentagon is in a dither over a proposal to cut military retirement pay.
An obscure provision in the Budget Reconciliation Act, now moving through Congress, would change the way retirement pay is calculated for senior enlistees and officers. In most cases the move would result in a 3 percent to 5 percent cut in their pension but it could be as high as 8 percent.
The Pentagon on Thursday released a letter from the Joint Chiefs of Staff to Rep. Floyd Spence, R-S.C., chairman of the House National Security Committee, calling the proposal “blatantly unfair and unwarranted.” Spence’s committee on Tuesday endorsed the proposal as a money-saving measure.
“We cannot continue breaking faith with the men and women who are serving our country,” the officers said. “Commitments must be kept.”
The proposal affects the roughly 335,000 enlistees and officers who joined the active force before Sept. 8, 1980, about 20 percent of the total force.
Under law, they can retire based on a percentage of the pay they are receiving on their last day. The new proposal would calculate their pension based on an average of the last 12 months’ pay.
Citing one example, the Joint Chiefs noted that a senior enlistee retiring at 26 years would receive a monthly pension of $1,914. Under the new calculation, the enlistee would receive $1,753 per month, an 8.4 percent reduction.
The new retirement rules could save taxpayers $649 million over the next seven years. But the Pentagon argues that military officers and enlistees will simply delay their retirement long enough to secure a higher pension.
“Accordingly, the anticipated savings to the retirement account would not be realized,” the Joint Chiefs wrote. Because the military is still cutting down the size of the force, the pension change could force the chiefs to order retirements, “a prospect we find abhorrent.”
Unless lawmakers reverse themselves, the provision on military retirement will be written into the reconciliation bill, otherwise known as the deficit reduction package. It is expected to be the subject of fierce debate this fall and may take until the end of the year to complete.
As well as arousing ire in the Pentagon, the proposal is somewhat of an embarrassment for the Republican-controlled defense committees in the House and Senate, especially at a time when defense legislation moving through both branches calls for billions in increased spending on weapons systems.
Spence said he agreed to the “modest change” only “reluctantly.”
The peculiarities of the budget process forced the committee to generate savings from within mandatory spending accounts such as salaries and pensions. In other words, lawmakers couldn’t cut funding for the B-2 bomber in order to avoid cutting pensions.
The news out of Capitol Hill for military retirees is not all bad, however. The same legislation also contains a provision to move the date of issuing cost-of-living increases to retirees up from October to April. It will cost an estimated $1.8 billion over seven years.