Military Update: Don't be misled, Military Coalition warns pay panel
September 8, 2005
The Military Coalition, a powerful league of 35 service associations and veterans’ organizations, has warned a blue ribbon panel studying military compensation to be wary of claims by senior Defense Department officials and outside economists that service pay and benefits need businesslike reforms.
Coalition representatives testified Aug. 31 before the Defense Advisory Committee on Military Compensation, leveling a barrage of criticism at DOD officials and recent government and independent reports that suggest military personnel costs are out of control, particularly for retirees and survivors, and must be reined in and rebalanced. Coalition witnesses also challenged committee assumptions that the 20-year retirement system is too rigid, that basic pay needs to be tied more closely to performance, and that the military pay system needs to be brought more in line with private-sector plans, where the emphasis is on flexibility for the employer and more choices for employees.
“The Coalition believes it is unwise to step back from the traditional military institutional model and shift to a civilian-style occupational model that pushes more money into skill-specific pays and bonuses or establishes different pay scales for different specialties,” said Joseph Barnes, coalition co-chairman and executive director of the Fleet Reserve Association.
“Too often, military people are looked on as human capital, in essence commodities, from whom the efficient objective is to extract maximum service at minimum cost,” said Steve Strobridge, coalition co-chairman and director of government relations for the Military Officers Association of America.
The seven-member advisory committee, chaired by retired Adm. Donald L. Pilling, former vice chief of naval operations, seemed a little stunned by the criticism, much of it directed at DOD leaders who formed the panel. A committee progress report is due to David S.C. Chu, undersecretary of defense for personnel, at the end of the month.
“I got the sense that they are very leery of any changes to this system we’ve had for 50-something years,” Pilling said after the hearing.
Pilling has said the committee will not recommend changes that break faith with the current force, although he has suggested that having retirees pay a larger share of their medical costs might be appropriate.
Chu and Defense Secretary Donald Rumsfeld, who chartered the committee, want military pay modernized and entitlement growth slowed. They opposed relaxing the ban on concurrent receipt of military retirement and VA disability compensation, ending the drop in survivor benefit payments at age 62 for surviving spouses, and extending Tricare to drilling reservists.
Chu has said that too many dollars go into “deferred compensation” such as retired pay, survivor benefits and Tricare for Life, the military’s supplemental insurance plan for Medicare-eligible beneficiaries. He and other officials have warned of soaring health costs, arguing that dollars spent on retirees have little impact on recruiting and current readiness needs.
The coalition attacked that mind-set.
“Dr. Chu has said that the 19-year-old doesn’t care about retirement; he wants a pickup truck,” Strobridge said. “Fortunately, Congress over the years has been wise enough to see that it’s not enough to meet the short-term desires of a 19-year-old enlistee.”
Strobridge also challenged a common criticism of military retirement, “cliff vesting” at 20 years. Only 15 percent of all enlistees and 50 percent of all officers serve long enough to retire. The others leave with no retirement benefits. The committee, like so many past study groups, has cited lack of early vesting as a reason to consider major changes.
With early vesting, he warned, anyone “facing an undesirable assignment or their third or fourth family separation at the 10- or 12-year point would have far less incentive to continue serving if they knew they could leave and take a good chunk of military retirement … with them.”
Strobridge said the Coalition would support early vesting if it wasn’t also obvious that, to pay for it, the value of retirement at 20 years or more almost certainly would be reduced.
“You all know that the government, already concerned about retirement costs, is not likely to simply add money to the current system to fund vesting, Thrift Savings Plan matching and so forth,” Strobridge said.
Barnes called recent reports of soaring military compensation costs misleading. For example, he said, a recent Government Accountability Office report, cited by committee members, said costs had jumped 29 percent from 2000 to 2004. The missing context, Barnes said, is that in 2000 military pay was 11.4 percent behind private sector wages; the Joint Chiefs were supporting repeal of the Redux retirement system and older military retirees had no Medicare supplemental health coverage. Congress acted in all of those areas, in part to address recruiting and retention challenges.
Moreover, in 2000, 9/11 was still a year away and would trigger a major mobilization and new initiatives to raise reserve pay and benefits.
“Much has changed since 2000, and our troops are now working harder and sacrificing far more,” Barnes said. “In fact, it can be argued that service and sacrifice is more than 29 percent greater now than in 2000.”
Ike Puzon, with the Naval Reserve Association, made the coalition’s case for new increases in Reserve and Guard compensation, an area that the pay committee expects to study and address.
Pilling said his committee still wants “to explore options that might be more attractive,” more cost efficient and fairer to future members than the current retirement and pay system. A final report is due by March 2007.
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