rent system in 1999, finding it more affordable than continued retention and readiness shortfalls. The Military Retirement Trust
Fund, which is run by the DoD Board of Actuaries, manages military retire- ment contributions, and the funds’ vi- ability is certified on an annual basis. In 2012 testimony before Con-
gress, Dr. Jo Ann Rooney, principal deputy undersecretary of defense for personnel and readiness, testified the current military retirement system is “neither unaffordable nor spiral- ing out of control,” noting retirement costs as a percentage of pay have re- mained reasonably constant. The Defense Business Board and others have criticized the current military retirement system, with its 20-year cliff-vesting feature, as being unfair. As stated in DoD’s November 2011
Military Compensation Background Papers, the military retirement sys- tem “was designed to retain a young, viable force and to provide a choice of career service … some measure of economic security … [for] members after retirement … and … a pool of ex- perienced personnel subject to recall … [in] a national emergency.” Its fundamental purpose is to induce the required number of top-quality people to serve a multi- decade career in uniform. It must exert a strong retention pull despite imposing an array of demands and sacrifices so extraordinary that few Americans are willing to endure them for one term of service, let alone 20 or 30 years. Never has this career pull been
more essential to force retention than over the past 13 years of repeat- ed wartime deployments. The military retirement system is fundamentally DoD’s primary career force management tool. Servicemembers understand
very early in their careers that qual- ifying for a military retirement re-
quires a commitment of at least 20 years of arduous service. Moreover, retaining all who join is not a goal. Hazardous duty, frequent moves, extended family separations, over- seas service, long hours of overtime without extra pay, forfeiture of many personal freedoms most civil- ians take for granted, and an “up- or-out” promotion system result in high attrition rates. Less than 1 in 5 servicemembers end up qualify- ing for retirement. It, therefore, requires a unique retirement system to reflect those career challenges. This reflects both the arduous-
ness of extended military service and the services’ needs to selectively retain the best-qualified candidates in progressively smaller numbers as they assume positions of ever-greater leadership responsibility. In January 2014, Vice Chairman of
the Joint Chiefs of Staff Adm. James Winnefeld Jr., USN, testified before the Senate Armed Services Commit- tee, saying, “I think it gets back to the variables that are inherent in any retirement plan. I think one that has been discussed the most is the vest- ing time, the piece about you have to wait until 20 years before you receive any retirement benefits. That actually helps us a great deal right now in the profiling of our force. We want to have a young force that’s going to stay to a certain point and then, frankly, we need a number of them to move on so that we can bring fresh new faces in.” With the creation of the all-
volunteer force in 1973, military professionalism has grown exponen- tially. According to the 2006 RAND Corp. study “The Evolution of the All-Volunteer Force,” “The AVF [all-
volunteer force] has dramatically increased the number of career per- sonnel and increased the proficiency and professionalism of the force.” MOAA couldn’t agree more. The
vast majority who exit military service do so with less than six years of ser- vice — large numbers with fewer than the five years required by many em- ployers to vest for retirement benefits. Those employing the “vesting un- fairness” argument imply separatees leave the military with no benefits, but that’s hardly the case. To the extent they have partici- pated in the military Thrift Savings Plan, they retain the same rollover rights for tax-deferred savings plans as any civilian job-changer. In addition, those who complete
at least one term of service qualify for an extraordinarily generous GI bill benefit that far exceeds any education benefit offered by almost all other employers. Depending on the circumstances of their separation from service, many servicemembers receive sub- stantial separation allowances. And perhaps most important, vet-
erans reap the military’s investment in their valuable occupational skills and team-oriented training, plus a history of job and leadership responsibilities that are often well beyond those expe- rienced by civilians of comparable age. All of these are tangible, portable benefits supporting veterans’ reinte- gration into the civilian sector.
Past military retirement changes This is hardly the first initiative to reform military retirement. Many changes, large and small, have been
JOIN THE CONVERSATION
Is a 401(k)-style plan right for the military retirement system? Share your thoughts with other MOAA members via MOAA Connect (
connect.moaa.org). Search for the “Retirement About-face?” discussion.
FEBRUARY 2015 MILITARY OFFICER 65
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