GI Jane Finances

March 11, 2008

End of Times?

Filed under: When it snows in hell — gijanefinances @ 9:30 am

Interesting article that was posted on the Early Retirement forum. The proposal would only go in effect for new recruits if passed:

Panel also recommends combining active, reserve retirement systems
By William H. McMichael – bmcmichael@militarytimes.com

A congressionally chartered commission has called for scrapping the entire military retirement system and making active-duty troops wait until at least age 57 to begin drawing retired pay. The proposal, which would spell the end of the current active-duty system that pays nondisability retirement immediately after a service member completes a minimum of 20 years of service, is among 95 recommendations in the final report of the Commission on the National Guard and Reserve, which went well beyond its original charter to review the structure and management of the reserve components and delved into personnel policies for active-duty members. Under current retirement rules, an active-duty member is eligible for retired pay immediately after completing a minimum of 20 years of service, which can be as young as age 37.

However, reservists must wait until age 60 to draw retired pay, although a law signed Jan. 28 by President Bush allows reservists to draw retired pay 90 days earlier than age 60 for every 90 days of mobilization in support of a contingency operation. Under the commission’s plan, a revamped retired system would grant limited retirement benefits starting at 10 years of service, although payments would not begin until age 62. Those who serve at least 20 years could receive payments at age 60; those who serve 30 years could get them at age 57. Under the plan, troops could begin drawing retirement pay at earlier ages, but the annuity would be reduced 5 percent for each year that a member is under the statutory minimum retirement age.

The commission said that would bring the military in line with the Federal Employees Retirement System. The commission concluded that combining the training, promotion and management of active and reserve troops into one integrated manpower system is the only way the nation’s military can become a truly efficient operational force for the future. “The increasing cost of personnel, and the challenges of recruiting and retaining qualified individuals, will, we believe, inevitably require reductions in the size of the active force,” states the 432-page report, released Jan. 31. “This shrinking active force will necessarily be accompanied by an increased reliance on reserve forces for operations, particularly for homeland missions. The overall effectiveness of those forces will depend on greater integration of the reserves with the active component.”

The commission argued that modifying the 20-year retirements would give the services an incentive to retain troops whom they want to keep for more than 10 years but for less than 20. Additional pay or bonuses would be needed to keep such troops in uniform beyond 10 years to maintain retention rates. “As part of the reformed retirement system, retention would be encouraged by making service members eligible to receive ‘gate pay’ at pivotal years of service,” the report says. “Such pay would come in the form of a bonus equal to a percentage of annual basic pay at the end of the year of service, at the discretion of the services.”

Matching funds for TSP
In addition, the report says Congress should expand current law to permit all service members to receive up to 5 percent of annual basic pay in matching government contributions to the Thrift Savings Plan. Service members currently receive no government matching funds for TSP contributions. “The government’s contribution would vest at 10 years of service, and the Thrift Savings Plan benefit would be portable and thus capable of being rolled over into a civilian 401(k) account,” the report says. Among the report’s other recommendations:

• The military’s promotion system should be competency-based versus time-based.
• Active and reserve officer personnel management systems should be merged into a single system.
• The number of duty statuses should be reduced from 29 to two — on active duty or off.
• The Defense Department should implement a combined pay and personnel system to eliminate problems with incorrect pay, low data quality, multiple personnel files and inaccurate accounting of credit for service.
• The Guard and reserve should be given the clear lead in Defense Department homeland security missions within U.S. borders. The recruiting and job market landscape has shifted in dramatic ways, the commission said, which means the Defense Department “must recruit, train and maintain a technologically advanced force in an era that will be characterized by ever-increasing competition for a shrinking pool of qualified individuals whose expectations about career paths and mobility are changing dramatically.”

“We need to look at our manpower assets with a totally integrated approach,” commission Chairman Arnold Punaro said. For active and reserve service members, such a system would create a “seamless” transition to and from active duty — “on-ramps” and “offramps,” as Navy personnel officials have described the concept. Basing promotions on competency rather than time would keep troops competitive within the system.

Reserve reorganization

The 95 recommendations in the report also include a call for the reserves to be reorganized into two formal categories: operational and strategic reserve forces. The operational reserve would consist of Selected Reserve units and individual mobilization augmentees who would deploy periodically. The strategic reserve would include Selected Reserve personnel and augmentees not scheduled for rotational active-duty tours and the “most ready, operationally current and willing members of the Individual Ready Reserve,” the report says. The commission also calls for scrapping the Standby Reserve category and said members who are not “viable mobilization assets should be excluded from the total reserve force.” The Defense Department would have to consistently provide the support needed to ensure the sustained viability of both forces, and Congress and the Pentagon would determine the missions each would perform. “There used to be an understanding that if you were ready for the away game, you were ready for the home game,” Punaro said. “Most everyone admits that’s not the case anymore. We need a very ready force at home in peacetime, just like we need a ready force for the overseas mission.”

The reserves were conceived as a strategic force that would be called to active duty only in national emergencies. But they have morphed over the past 18 years, beginning with the 1991 Persian Gulf War and spurred by the military drawdown of the 1990s, into an operational reserve that is now regularly called upon to meet the demands of the wars in Iraq and Afghanistan. “It’s clear that if you hadn’t had an operational Guard and reserve, you would have had to go back to the draft, which I think everyone agrees is … pretty unacceptable,” Punaro said. Punaro is “very bullish” on the prospects for the commission’s work to receive serious attention. Half of the 95 recommendations “can be done immediately,” he said. About 40 will require congressional or presidential action, according to the report.

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