since9
Campaign Veteran
Article.
My two cents:
My two cents:
My paycheck says "Pension," and I receive a 1099-R in the male each year, NOT a W-2. Military retirement pay is a CONTRACT the same as any other U.S. indebtedness and is NOT subject to a post-retirement change by the "Defense Business Board" or any other flunky for Obama or the Dem's anti-military forces. The question of " whether to exempt current service members so their plans won't change" should NEVER be raised by ANY news agency as a question, as it's totally out of the question by it's very nature. The U.S. Government can no more legally change current retirement programs than it can default on any of it's other contracted financial obligations. If they tried, the ensuing class-action lawsuit would utterly deplete any and all potential savings, and would likely cost the American taxpayer considerably more than simply honoring the financial obligation to current retirees.
SHAME on CBS "News" for FAILING to research this further and reporting on it accurately.
I'd add that any program that changes the retirement picture when a military service-member is midstream is similarly illegal, as the military pitches the retirement options as part of the incentive to join in the first place. It doesn't matter that it's not written down on one's papers when they join: Under our country's system of law, verbal contracts are as legally binding as written ones. They're simply more difficult to prove in a court of law. With millions of active duty and retired military vets acting as witnesses, however, it shouldn't be too difficult to prove!
On the other hand, they could change retirement picture today, for recruits signing up tomorrow, provided they let the new recruits know of the change. I've never understood, for example, why the top dog's retirement pay is $7487.55, nearly $1,500 more than the active duty pay of an O-3, the "workhorse" rank in the officer corps. I also believe it's inherently unfair for someone to walk away with nothing after 12 years, a common practice for captains who're passed over for major.
I support the move to a 401k-like plan where a flat percentage of one's basic pay is matched by the government. In order to equate to today's retirement plans, however, the contributions and the matching would be hefty! Let's take the example of a Lt Col who retires at 26 years. Under the current system their last year of basic pay would be around $100,000, with a retirement pay of around $50,000. If they were 50 when they retired and lived to be 75 years old, that comes to $1,250,000 of retirement pay. Let's kill the zeros and call it $50k annual, and $1.25M total. We're assuming inflation and net return on investment are the same in order to simplify the numbers by removing the time value of money.
Under a 401k matching plan, in order for one's retirement pay to be the same, the service member would have to contribute a little more than 32% of his basic pay, and the government would have to match it! Is that something the government really wants to do? Can a captain really afford to save 32% of his basic pay? Does the government really want to shift the payments from 20+ years in the future to now? Can they afford that?
Keep in mind the number of folks serving in the military is only 1/2 of 1% (0.48%) of the U.S. population as a whole, and the those who actually retire is but a fraction of that. Compared to the entire U.S. Budget, the total retirement pay comes to a drop in a full barrel of rain. Given the fact military pay is the primary incentive for keeping the more experienced folks on-hand to maintain and direct current and future operations, as well as train up those less experienced, is this really something that should be looked at from behind a budget axe?
I don't think so! I think monkeying around with this WILL have a dramatically negative effect with respect to the quality of individuals you'll initially attract and keep in the military ranks. There's a REASON our military is the best in the world, the mostly highly trained and professional, and the retirement carrot is a big component of that reason. Messing with it at all, for either retirees or those currently on active duty, will result in seriously negative consequences.
Given the fact that percentage-wise it'll have a negligible effect on the bottom line of our nation's economy, I think it's an incredibly stupid idea.
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