Given the parameters, MOAA anticipates the MCRMC’s report — due in February — could recommend signifi cant retirement changes for future service entrants. The MCRMC could recommend:  keeping the current 20-year

system as is;  changing the retirement calcu-

lation (e.g., high-three to high-fi ve or reducing the multiplier);  delaying eligibility to receive immediate retired pay (e.g., until age 50 or older);  adding a 401(k)-style element

The main thrust behind these

recommendations centers on the aff ordability of the current retire- ment system. Such proposals aren’t new. For decades, whenever bud- gets tighten, analysts, task forces, and commissions propose military retirement cutbacks. In 2011, the Defense Business

Board characterized the current re- tirement system as “unfair, infl exible, and unaff ordable” and recommended adoption of a 401(k)-style plan for all future entrants. Current service- members either would remain under the existing system or transition to a hybrid retirement plan. When troops responded with

outrage, defense and congressional leaders disavowed the proposal as detrimental to readiness. But past Defense Secretaries Robert Gates and Leon Panetta and some in Congress have continued to call for reform. As a result, the FY 2013 National Defense Authorization Act estab- lished the Military Compensation and Retirement Modernization Com- mission (MCRMC) to review the retirement system and make recom- mendations to modernize it. According to its charter, the goal of the commission is to ensure the nation can maintain a professional all-volunteer force in both peacetime

62 MILITARY OFFICER FEBRUARY 2015

and war and develop proposals to help guide Congress’ future deci- sions on military compensation, ben- efi ts, and retirement. The president directed the commissioners to review “the full breadth of the systems,” including health care, military family support, and any federal programs that could infl uence the decision of current or future servicemembers to stay in uniform or leave the service. The guidance also specifi ed all currently serving personnel should be grand- fathered under the current system. Gates particularly criticized the

existing 20-year retirement system as being unfair to those who leave service before that point. His succes- sor, Panetta, similarly said, “[Those who leave service before complet- ing 20 years] are not vested in any way. The question that is at least le- gitimate to ask is, ‘Is there a way for those future volunteers to shape this that might give them better protec- tion to be able to have some retire- ment and take it with them?’ ” However, no would-be reformers

envision spending more on military retirement. Any change to provide additional benefi ts to those leaving before the 20-year point could be funded only by reducing benefi ts for those who serve longer.

requiring member contributions along with some of the changes above with a possible transition pay- ment (similar to the DoD concept paper); or  replacing the current system en-

tirely with a 401(k)-style plan. The early-vesting element of a

401(k)-style plan would appeal to younger personnel who don’t expect to complete a military career or who don’t understand the value of the military retirement package. It also would cost considerably less for the government to support. Such propos- als typically require some level of servicemember contribution and a delay of eligibility for payments until at least age 59½. Making dramatic retirement changes poses a big readiness ques- tion: Would the new system still induce the required numbers of top-quality people to serve a full military career? To help answer that question, it’s important to look at some history.

The origins of the 401(k) Many Americans view the 401(k) plan as the bedrock of retirement planning, but its origins prove to be far more accidental, according to The Surprising Origins of Your 401(k) by Tom Anderson. In defi ned benefi t plans such as military retirement, retirees receive