Troops’ and veterans’ groups divided over compensation reform
March 29, 2015
The Military Coalition can make Congress tremble from time to time by presenting a united front of millions of members from more than 30 military associations and veterans’ service organizations in support of, or opposition to, legislation affecting military folks and veterans.
That lesson was learned by budget committee chairmen a few Decembers ago after they led Congress to enact — and then quickly to repeal — legislation that would have permanently capped military retirees’ annual cost-of-living adjustments 1 percent below inflation.
The power of that coalition is now fractured over whether to support key recommendations of the Military Compensation and Retirement Modernization Commission. Some of these groups are turning thumbs up, others thumbs down and most still want to see more analysis on proposals to replace triple-option Tricare and to phase in a new retirement system.
As the House armed services’ subcommittee on personnel discovered Wednesday at a “stakeholders” hearing, where a group stands will depend on whom it serves. Associations largely representing career retirees want to preserve the value, and not risk force-retention effectiveness, of traditional 20-year retirement for future generations of servicemembers.
Groups with larger veteran populations, most of whom left service after a tour or two, and with no retirement benefits, favor the commission’s call to blend a smaller immediate annuity at 20 or more years’ service with a new 401(k)-like savings plan that has government matching of member contributions and full vesting in the balance after only two years of service.
Reserve and Guard associations also tend to favor the more modern retirement features found in the private sector. And though a majority of groups are wary of replacing Tricare, even with a new health care allowance for in-service families to buy coverage off a menu of commercial health insurance plans, the National Military Family Association sees potential here for families to gain more choice and faster, easier access to care.
Rep. Joe Heck, R-Nev., chairman of the personnel subcommittee, said the “heavy lift” for Congress from among 15 commission recommendations is retirement, health care and on-base stores, and lawmakers need to hear the views of stakeholder groups. This day they heard a cacophony, not a choir.
Scott Bousum, legislative director of the Enlisted Association of the National Guard, praised the commission for designing “flexible mechanisms” that current and future servicemembers can use “to choose health care and retirement packages that fit their individual needs.”
The retirement system today, said Brendon Gehrke, senior legislative associate for Veterans of Foreign Wars, “leaves roughly 90 percent of all veterans behind their civilian counterparts in saving for retirement.”
While nearly 80 percent of full-time civilian workers have access to employer-sponsored retirement plans, and 95 percent of employers with 401(k) plans match contributions by employees, Gehrke said, “the government contributes nothing to the retirement of those who often are the most deserving: those who bore the burden of battle.”
Though not rejecting the commission’s plan outright, retired Air Force Col. Michael Hayden, director of government relations for Military Officers Association of America, said MOAA is concerned the plan “lacks the drawing power” to keep enough members in service out to 20 years and beyond.
Also, Hayden testified, the combined effect of higher insurance premiums for working-age retirees and lower retirement value, if these were in place today, would pare compensation for a retired E-7 with 20 years by “over $6,400 a year, for a loss of 27 percent — until they can start to draw from their [government-matching] thrift savings plan at age 59-and-a-half.”
The commission’s push for flexibility and choice in health insurance and retirement options, though lauded by some, was challenged by Hayden as creating uncertainty, both for careerists in understanding the value of their compensation and for force managers in retaining personnel.
“Servicemembers stationed around the world should not have to worry if they have selected the appropriate retirement fund or appropriate health care coverage for their families,” Hayden said. “Making radical changes to the core retention programs” risks unintended negative effects.
Iraq and Afghanistan Veterans of America surveyed its members, all combat veterans, and found 36 percent favor retirement reform, said IAVA’s Chris Neiweem. They see it as “fundamentally unfair that one could serve 10 or 12 years with three, four, five or more deployments and leave the military with absolutely no retirement benefit,” Neiweem said. “Yet a careerist who possibly never even deployed could be entitled to full benefit package.”
Rep. Tim Walz, D-Minn., a retired Army National Guard command sergeant major, asked if the witnesses accepted the notion that to gain portable retirement benefits for 80 percent of the force, the value of traditional 20-year retirement would have to be cut for future members.
MOAA doesn’t believe that, Hayden said. But the VFW’s Gehrke said theoretically it doesn’t have to be but without a tradeoff “costs are going to skyrocket.” He said the commission plan is “the next best alternative.”
Heck asked witnesses if they agreed with one commissioner who said Tricare is broken and can’t be fixed. Bousum, Hayden, Neiweem and John Stovall, national security director for the American Legion, disagreed.
Gehrke, however, described Tricare as in a “death spiral.” And Karen Ruedisueli, deputy director of government relations for the National Military Family Association, agreed with that commissioner that Tricare is broken.
The commission’s Tricare Choice proposal, Ruedisueli said, merits “serious consideration” given its potential to provide families “a more robust and valuable health care benefit, one that would address many beneficiary complaints about the current system.”
But NMFA needs more proof, she said, that subsidizing access to commercial health insurance won’t jeopardize overall medical readiness to support the troops, or trigger higher out-of-pocket costs for families.