Fort Hood retirement news

The Mil­i­tary Offi­cers Asso­ci­a­tion of Amer­ica is warn­ing that the mil­i­tary retire­ment sys­tem is fac­ing assaults from var­i­ous fronts includ­ing out­go­ing Sec­re­tary of Defense Robert Gates, incom­ing Sec­re­tary Leon Panetta, Con­gress, and Vice Pres­i­dent Joe Biden.

Accord­ing to a recent Military Officers Association of America (MOAA)  arti­cle, “Gates has crit­i­cized the “one-size-fits-all” 20-year retire­ment struc­ture and has directed the Defense Sci­ence Board to estab­lish a work­ing group to develop alter­na­tive options.” Gates tes­ti­fied to the Sen­ate Appro­pri­a­tions Com­mit­tee last week that he liked the idea of an early vest­ing sys­tem because, “70–80% of the force does not stay until retire­ment but leave with noth­ing.” This type of plan could enable service members to leave the mil­i­tary with some form of retire­ment sav­ings prior to reach­ing 20 years of ser­vice. How­ever, unlike the cur­rent sys­tem, they would not be able to draw ben­e­fit pay­ments until age 60 — sim­i­lar to a civil­ian 401K pro­gram.

Here is a quick list of ideas being dis­cussed:

  • Con­vert­ing to a civil­ian­ized 401(k)-style sys­tem under which full retired pay wouldn’t be paid until age 57–60.
  • Autho­riz­ing the ser­vices to make vari­able annual retire­ment con­tri­bu­tions depend­ing on chang­ing reten­tion and skill require­ments.
  • Vest­ing retire­ment ben­e­fits after 10 years of ser­vice.

While none of these ideas are likely to affect cur­rent retirees, the impact on future reten­tion and recruit­ing efforts could be as bad as seen after high-36 and other changes that were imple­mented back in the 80’s.

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