If our nation is willing to impose unlimited sacrifices on service- members and their families over the course of a military career, it must not simultaneously re- duce its responsibil- ity to protect career servicemembers’ and families’ welfare. ... From our foxhole, the cliff-vested retire- ment system remains the most important benefit to sustaining the career force.


introduced over the past 35 years, and the degree of success has been inversely proportional to the magni- tude of the change. A law change in 1980 resulted in the “high-3” model, where retired pay calculations are based on the highest 36 months’ average basic pay amount for subsequent service entrants. Retired pay for earlier entrants was grandfathered based on the servicemember’s basic pay amount upon retirement. Then in 1986, Congress enacted


the more radical REDUX model that, for post-1986 service entrants, reduced lifetime retired pay value by more than 20 percent. Then-Defense Secretary Caspar


Weinberger strongly opposed the change, warning it inevitably would


66 MILITARY OFFICER FEBRUARY 2015


harm long-term readiness. His warn- ing proved all too accurate a decade later, and Congress repealed REDUX in 1999 after the Joint Chiefs of Staff testified it was causing worrisome career retention problems. There can be no clearer dem-


onstration of the adverse effect on readiness of major retirement cuts — and no clearer demonstration that grandfathering the current force while imposing major retirement cuts on future entrants doesn’t change the adverse effect but only delays it. The all-volunteer force has proven to be the cornerstone of America’s national defense through decades of hot and cold wars, despite pundits’ and bean counters’ continual gloom- and-doom predictions that retirement costs are spiraling out of control. The adoption of a 401(k)-style


retirement would be a far more se- vere change than REDUX and almost certainly will prove to be a retention- killer, regardless of any grandfather clause for the current force. It is not hard to imagine a future mid-career servicemember, faced with a third or fourth deployment, choosing to leave the service when he or she can walk


away with a 401(k) in hand. That choice would be made far easier if Congress also cuts benefits for com- pleting a career — as envisioned by every vesting proposal offered to date. In the end, claims that the current


system is unfair to early separatees are a red herring, designed to mask the shift of the cost of retirement away from the government and onto the backs of servicemembers — the one weapon system that has never failed our nation. The powerful pull of the 20-year


retirement system is the main reason retention hasn’t imploded over the past 13 years of unprecedented war- time strains on troops and families. After the Great Recession of


2007, when the market significantly dropped, more and more workers


who were looking to retire on their 401(k)s found themselves remaining in the workplace for several more years until their portfolios recovered from a 30 to 50 percent drop. Ser- vicemembers who stay two to three decades need and deserve predict- ability in retirement and should not be subject to market fluctuations. The crucial element to sustain- ing a high-quality, career military force is establishing a strong bond of reciprocal commitment between the servicemember and the government (i.e., loyalty). If this reciprocity is unfulfilled, or if faith is broken with those who serve, retention and readi- ness inevitably will suffer. So what have we learned?  It’s well documented that


401(k)-style plans undermine em- ployer-employee loyalty and discour- age long-term retention.  Past military retirement cuts far


less dramatic than those now being proposed have generated unaccept- able readiness problems, regardless of grandfathering provisions.  Cutting rewards for serving an


arduous military career while in- creasing rewards for separation is not a viable formula for retention of a high-quality career force. If our nation is willing to impose unlimited sacrifices on service- members and their families over the course of a military career, it must not simultaneously reduce its responsibility to protect career ser- vicemembers’ and families’ welfare. The most critical element to


the all-volunteer force is the well- trained, seasoned mid-grade NCO and officer corps. From our foxhole, the cliff-vested retirement system re- mains the most important benefit to sustaining the career force.


MO


ON THE WEB  Visit www.moaa.org/mcrmc for more information about the committee.


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