House defense bill backs plan to overhaul military retirement system
WASHINGTON — House lawmakers said Tuesday they will unveil a defense budget this week that calls for overhauling the military retirement system by 2017.
The measure is being supported by the leadership of the House Armed Services Committee as part of its version of the annual defense authorization act, according to committee leaders who sat down with Stars and Stripes. Meanwhile, the lawmakers said the committee will not pursue any changes to Tricare health insurance or commissaries in the defense bill.
A blended 401(k)-style retirement system was suggested in January as part of a landmark study by the congressionally appointed Military Compensation and Retirement Modernization Commission and has sparked wide-ranging debate among servicemember and veteran groups.
“We think there is benefit in requesting the [Defense Department] come back to us probably within six to eight months with an implementation plan,” said Rep. Joe Heck, R-Nev., who is chairman of the Armed Services subcommittee on military personnel.
Under the blended retirement system, the military would give all new servicemembers a Thrift Savings Plan account and provide matching contributions throughout their service. Troops who separate after 20 years would still get a pension but only 80 percent of what those already in the system today will get.
Heck said the Armed Services committee will modify the compensation commission proposal by continuing the TSP contributions beyond 20 years for those who want to continue serving. The loss of contributions was a sticking point for some military groups.
Servicemembers who are serving now would see no change or reduction to their retirements if they choose but could opt into the new system.
The bill will require the transition to the new retirement system be complete by October 2017, according to Heck, who will introduce the legislation Wednesday, and Rep. Mac Thornberry, R-Texas, chairman of the Armed Services committee.
The Senate Armed Services Committee signaled that it is also still considering the overhaul for the National Defense Authorization Act.
Staff for Sen. John McCain, R-Ariz., who chairs the SASC, said he supports Heck and Thornberry.
The Senate committee is “continuing to examine all options for modernizing the current system and providing greater value and choice to military servicemembers and their families,” McCain spokesman Dustin Walker wrote in an email to Stars and Stripes.
Other key issues that will not make it into the committee’s defense bill:
The MCRM panel recommended replacing the Tricare system with a wider selection of private insurance plans similar to what is offered to federal employees, but Heck and Thornberry said the issue is too complex and there has not been enough time to study it and make changes.
The proposal to consolidate military grocery and exchange stores will be put on hold until a contractor can finish a study of the two systems ordered in last year’s defense authorization act.
The Armed Services subcommittees will spend this week crafting various sections of the National Defense Authorization Act, and then the full committee is slated to pass a final version in a marathon session next week.
The committee’s bill must pass the House and eventually be merged with the Senate’s version, but the work this week — including the retirement overhaul — will set the course for what eventually gets passed into law.