NDAA FY2016 Changes to Military Retirement

[Tycho_Brohe]

What about making at least some % automatic, unless one opts out? So 3% of your salary automatically goes in, plus you get the match, unless you fill out paperwork to decline. That creates an opportunity to catch those who are opting out, and provide them with some information before they do so. Thoughts?

Not a bad idea but the brutal truth is that this new plan has one, and only one, goal: to save the DOD money. They hope and pray that as few people as possible contribute and get the matching contribution and I don't envision them doing anything to incentivize members to contribute. The opposite goes for the current system's 15-year lump sum REDUX; terrible deal for the member, great deal for DOD.

See:

DOD Auto Contribution: 1%

 

[villanelle]

The auto contribution isn't the same as an automatic user contribution though. If they made 3% automatic unless someone opts out, then they'd be getting the 7% (3% of their own, a 3% match, and the 1% auto contribution). Making the lazy choice the responsible choice may just help more people make a bettre decision, even if that better decision is based on inertia.

 

[zippy]

The auto contribution isn't the same as an automatic user contribution though. If they made 3% automatic unless someone opts out, then they'd be getting the 7% (3% of their own, a 3% match, and the 1% auto contribution). Making the lazy choice the responsible choice may just help more people make a bettre decision, even if that better decision is based on inertia.

Of course. If they were serious about ensuring their personnel got the most from their retirement plan they would have made a 5% minimum contribution requirement for service members with immediate vesting.

Don't be fooled and think they didn't know how little junior service members actually contribute to TSP when they first start out when they switched to this program.

DOD was already allowed to match TSP funds if they wanted to for select circumstances (6yr commitments I think) but they didn't why would they want to contribute more than the bare minimum now.

On the civilian side, the government GS system switched from CSRS to FERS in the 80s and got TSP and matching funds in return for a reduced pension % based on high-3 in order to force GS employees to contribute to social security, stating that social security would be part of their GS retirement package now.

FERS employees now see as little as 1/3 of the retirement annuity compared to their CSRS counterparts, a TSP account that got evicerated when the markets crashed and social security that doesn't have enough money to maintain full benefits in the future. In virtually every case, the Old CSRS system was a better deal GS workers, time will show that trading 10%+ base pay in retirement annuity for a 5% matching fund wasn't a winning choice for service member- and the bean counters know it now.

 

[azguy]

See:

I don't think you understand...

 

[Tycho_Brohe]

I don't think you understand...

Yup, villanelle pointed that out already.

 

[hummerhole]

I am all for saving the government money. I think we can all agree that the military (particularly the military benefit system) is extremely bloated. What I don't agree with is the fact that Congress is not making, and has no plans to make, cuts to their benefits, which is wildly unjust.

The military was selected for these cuts because it is an easy target. Welfare and social security overhaul is political suicide.

If we are making cuts, they need to be across the board cuts. I apologize if this point has already been brought up, as I have not read all 15 pages of the thread.

Additionally, there needs to be a pay raise immediately for pay grades E-1 to E3. With the current direction of the country, how are we ever going to be able to recruit a sailor to sweat their ass off on the flight deck when they can be making an equivalent wage flipping burgers?

 

[Spekkio]

Just to clarify, just because something will take a lot of hard work isn't a reason to not do it, especially when your job as a division chief or a div-o is to, well, take care of your junior enlisted.

"Taking care of your Sailors" often involves pointing them to the proper experts, not helping them yourself. In the case of retirement financial planning, few if any DIVOs fresh out of college are qualified to be giving anyone financial advice. Besides the credibility issue of a freshly minted butter bar or Ensign upper half making around $50,000/yr telling a guy making $15,000/yr that he needs to save more for retirement, particularly when the latter may have other dependents or debt, there is also a liability aspect - do you really want to be on the hook when you told SN Timmy to buy some C and he posts a loss for the year?

On top of that, the military won't even match the contribution from a servicemember until his 3rd year of service. Might as well take the 1% free money and that's it.

So you have to at some point hire people who are actually good at this sort of thing and that will carry its own costs.

 

[Randy Daytona]

I am all for saving the government money. I think we can all agree that the military (particularly the military benefit system) is extremely bloated. What I don't agree with is the fact that Congress is not making, and has no plans to make, cuts to their benefits, which is wildly unjust.

The military was selected for these cuts because it is an easy target. Welfare and social security overhaul is political suicide.

If we are making cuts, they need to be across the board cuts. I apologize if this point has already been brought up, as I have not read all 15 pages of the thread.

Additionally, there needs to be a pay raise immediately for pay grades E-1 to E3. With the current direction of the country, how are we ever going to be able to recruit a sailor to sweat their ass off on the flight deck when they can be making an equivalent wage flipping burgers?

The military was selected because our retirement benefits are well in excess of anybody elses' retirement benefits - civilian, most government, most of our NATO allies. Work 20 years and then a pension for 40+ years. Unbelievable cheap medical benefits for the retiree and his family. Unrivaled education benefits that can passed to other family members. When civilians were getting pensions and medical bills were not in the stratosphere, our benefits were not that much more - now they are exponentially above most in the civilian workforce and are taking up a greater and greater share of the Pentagon's budget.

Mind you I would prefer to keep the benefits but facts are facts. Perhaps welfare could be cut - but people have paid into social security for many years and are retiring on it. Go ahead - justify it to the general public - you want to cut social security to a retired 70 year old drawing $18,000 per year.

 

[robav8r]

The military was selected because our retirement benefits are well in excess of anybody elses' retirement benefits - civilian, most government, most of our NATO allies. Work 20 years and then a pension for 40+ years.

Randy - not necessarily pointed at you, but it's a dangerous road ( IMHO) to start traveling down comparing the military to civilians wrt benefits. Yeah, I get it - military pay & retirement is expensive. Perhaps the conversation needs to be what kind of military is the nation willing to pay for? I think you and I both know the answer. But when we start trying to level the professional playing field between civilians and the military and then have to succomb to the manpower and diversity initiatives, trying to make sure that we look more like someones defintion of "society", well, I get a little farkled up. Just because I am compensated well, doesn't mean my civilian counterpart has the right to the same benefits. Funny, I don't recall any of the folks trying to diminish my benefits being at sea with me for my 10 deployments. End rant . . .

 

[hummerhole]

The military was selected because our retirement benefits are well in excess of anybody elses' retirement benefits - civilian, most government, most of our NATO allies. Work 20 years and then a pension for 40+ years. Unbelievable cheap medical benefits for the retiree and his family. Unrivaled education benefits that can passed to other family members. When civilians were getting pensions and medical bills were not in the stratosphere, our benefits were not that much more - now they are exponentially above most in the civilian workforce and are taking up a greater and greater share of the Pentagon's budget.

Mind you I would prefer to keep the benefits but facts are facts. Perhaps welfare could be cut - but people have paid into social security for many years and are retiring on it. Go ahead - justify it to the general public - you want to cut social security to a retired 70 year old drawing $18,000 per year.

Umm I'm pretty sure we are making the same exact point...am I missing something?

 

[Flash]

... I don't agree with is the fact that Congress is not making, and has no plans to make, cuts to their benefits, which is wildly unjust.....If we are making cuts, they need to be across the board cuts....

Congress and its staff are all part of the federal civil service retirement system, the only difference is they pay more into their retirement and get a larger annuity as a result. Folks who were in Congress before 1984 are under the previous civil service retirement system which was more generous and gets the biggest press when folks talk about and criticize comgressional retirement. There is plenty of falsehoods about Congressional retirement floating out there, it is certainly generous compared to what most Americans get nowadays but not when compared to the military one, old or new.

Even then the military retirement is still much more generous than the federal civil service one with an immediate pension that is quite a bit more generous than one most civil servants get at 57 or 62, when they can retire and get their retirement.

 

[exNavyOffRec]

They already want to make changes to what they just passed, glad I am retired.

http://www.navytimes.com/story/mili...nds-new-military-retirement-reforms/80294156/