DoD Echoes MOAA’s Concerns In Retirement Reform

June 5, 2015

DoD is giving Congress cautious approval on moving forward with retirement reform. After months of internal deliberation, one of the Joint Chiefs of Staff came out in support of recent proposals on some of the biggest changes to military compensation in a generation.

On May 21, in a virtual town hall with enlisted airmen, Air Force Chief of Staff Gen. Mark Welsh used messaging similar to what MOAA has been saying on Capitol Hill over the past two years: "Don't reward people who stay less than 20 by hurting people who stay more than 20."

Since January, Congress has been weighing the merits of a report by the Military Compensation and Retirement Modernization Commission (MCRMC) that calls for reductions in military pensions and moving troops to a blended retirement system. As part of its list of recommendations, the MCRMC proposed cutting military retirement by 20 percent. In exchange, troops would receive government contributions to Thrift Savings Plan (TSP) accounts, the federal employee equivalent to a 401(k) account. Government contributions would stop after 20 years of service, regardless of whether or not the servicemember continues to remain in uniform.

Welsh and the other Joint Chiefs will ask Congress to support another MOAA position: extend government contributions to TSP accounts to troops serving more than 20 years. According to Welsh, stopping contributions at the 20-year mark makes "no sense."

"This is what MOAA's been saying all along. We're glad to see the Joint Chiefs are not only hearing, but echoing our talking points," said MOAA's Director of Government Relations Col. Mike Hayden, USAF (Ret.).

MOAA supports providing a portable career device for those who leave the service prior to the 20-year point, but we have serious concerns that the MCRMC's proposal will fail to provide the necessary draw to retain members to 20 years of service.

Congress is currently considering two options for military retirement. Members of the Senate Armed Services Committee essentially adopted the MCRMC's retirement proposal in its version of the FY16 defense bill.

House lawmakers, however, wisely understood that stopping TSP contributions at the 20-year mark would provide a disincentive to remain in uniform. When the House passed its version of the defense bill in May, they voted to extend government contributions for troops serving more than 20 years.

"What we'd really like," said Hayden, "is for Congress to take more time to study the second- and third-order effects of these retirement proposals."

Discrepancies between the two bills will have to be resolved in conference committee later this summer.