Posted on 04/25/2015 7:47:04 AM PDT by SandRat
Congress on Thursday took a first, perhaps historic step toward phasing out the 20-year-or-bust retirement system the U.S. military has used to shape and retain its career forces since the end of World War II.
The replacement plan, as endorsed by the House armed services’ personnel subcommittee, is a blended system that would cut by 20 percent the value of future force annuities in return for an added tool to build nest eggs earlier — a 401(k)-like Thrift Savings Plan with government matching of service member TSP contributions.
The enhanced TSP, with matching of monthly deposits of up to five percent basic pay, would provide something the current High-3 plan cannot: portable retirement benefits available not only to careerists but most of the 83 percent of service members who leave service short of 20 years.
(Excerpt) Read more at svherald.com ...
Please remember the rest of my argument. Military vesting should start at 5 years. So once you've reached that time, you'll get a pension. Five years wouldn't get you much. But the more years you put in, the greater your pension.
Retirement is one of the few benefits left for enlisted members. Forcing them to pay into another government-sponsored plan would be no different than making them pay for medical benefits.
Enlisted members pay for their retirement by default—their pay is significantly less over a twenty-year career. While I will not say the pay is unreasonable; I do say it is part of a complete package that does not include a buffer for more “contributions.”
Active Duty ping.
Sure there are matching funds for the 401ks, but like some people were saying, a lot of the enlisted ranks live pay check to pay check. I was one of them, living on 25 cent packages of macaroni and cheese, 50 cent packages of spam, and all the c rats I could get. This was back in the early 70s.
Your post #24 is spot on. The whole “matching funds” concept for the military is, at best, a distraction. But more likely it’s an attempt to balance the budget on the backs of those least likely to complain.
The military is one of the few places where a traditional pension plan system makes sense. No matching funds nonsense. You put in your years, you get a pension.
What your’re overlooking is that the military WANTS its lower ranking people to be young. Its higher ranking people, enlisted, warrant, and commissioned, are the older ones. There are far fewer slots for higher ranking people, so they WANT people gone by the 20th year. That’s why they kick out those who don’t get promoted at certain cutoff point. They don’t want but a tiny fraction to make it to 25 years.
After 25 years service that person would be about 45 years old if they entered at the normal age when men join the military. Except for rare individuals, most 45 year olds can’t keep up with 20 year olds.
Good point. However, it doesn't make sense, from a financial point of view, to offer a full pension to someone after 20 years. That's how companies - and countries - go broke.
Yet it is grossly unfair to separate someone from service after, say, 15 years, with no pension at all.
My solution: Offer partial pensions starting with 5 years of service, and full pensions after 25 years. And give vets absolute priority when hiring for civilian government jobs (the post office, civilian site security, etc.)
Yes its 100% their property, I am a member of the TSP program and it is a great program.
This is stupid beyond belief. What enlisted person is going to want to remain in the military? Crappy pay. Having to move all the time. The one good thing was the retirement. They will spend much more money having to train new recruits.
I think the 20 year vesting requirement for the military is a good thing.
But that is not what they are talking about. Currently if someone puts in 19 years and leaves they get nothing. This would provide them with a portable 401K that they would take with them.
I would imagine. Same as paychecks and SGLI.
I think this is potentially a good idea, but the main roadblock is the generally awful financial knowledge of young Soldiers. If a new E-1 started paying into this from the day he joined, and carried on into 15 years and went on somewhere else, he’d be very well set. However, how many of them will see the wisdom in such a move?
But it does make sense from a national security point of view. We want to retain the best, the brightest, and the most capable. The offer of an excellent reward at the end of that time makes perfect sense for retention.
Also, it makes sense based on the job performed. Most troops I know, and I'm a retiree from the Army, have been overseas in a combat zone a minimum of 3 tours.
That is 3 years at 24 hours a day and 7 days a week that they are on the job. That is nearly 27,000 hours for pay. An average work year at 40 hours a week is 2000 hours. They have accumulated 13 years of pay in 3 years, and they will not be paid for it in their monthly paychecks. They will not ever be paid for it.
The compensation for that kind of expenditure of life is the retirement.
Finally, it makes sense from a danger/trauma point of view. The men I know have all experience the death and/or injury of friends, unit members, and others. Their eyes have seen things that eyes ought not to have experienced. They have lived 24/7 with the thought of their own deaths and the loss of their loved ones in the forefront of their minds. What do you pay for that? You can't pay for that. The pension is one effort to say thank you to these men.
Now, I've run across government workers in different departments from social security to department of education. They come home every night to their comfy little homes and they return to work each day to their comfy desks and computer screens.
There is simply no comparison.
Just like when they dumped the original GI Bill at the end of 1976. New recruits had the new Bill (I forgot its name) where they had to put in $100 per month of their pay for the first year. At that time an E-1 made about $330 or so per month before taxes. Most back then were not married but many did not want to afford a one third pay reduction for a quarter of their enlistment. My wife was one of these but I was lucky enough to have entered service with the old Bill.
I honestly don’t think investing in a market as manipulated and regulated as the US stock market is necessarily a good idea. Not that the government is a better idea. Odds are the Federal government will be unable to pay its dept without massive inflation in the next 25 years anyway, so long term investment is shaky to start with.
You want a solid retirement invested in having many children who can hold jobs.
This is a smoke screen to got more tax from the retired. Here will be the way it works. The 401K income will put the retiree into have a pay tax’s bracket. Then 85 % of the SS is taxable. Now the retirement pay is either 100% taxable. Or the retirement would be taxed at 85% like SS is. Any way the results are more tax money for the government.
Don
You can always tell the comments by the civilians that know NOTHING about the military.
Yup. Hubs is 24 years in and we’re on our 8th separation. (First time it’s not an actual deployment. This time it’s Korea... and this is our last time.)
I’ve lost track of the PCS moves.
Hub’s body is about done. He’s going to be living with the damage to his hip, knees and feet for the rest of his life. At this point, PT is a struggle.
The military breaks men’s bodies by the 20 year mark. Most don’t even make it that far.
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