Give Him a Medal
Rep. Les Aspin (D-Wis.) deserves a medal for finding a way to save taxpayers billions of dollars in military retirement costs and still play fair with members of the armed forces. Aspin, who is the chairman of the House Armed Services Committee, got his plan through the House on Tuesday. The Senate should waste no time in following suit.
Under existing law, service men and women can retire after 20 years, regardless of age, at half the average pay of their three highest-paid years. If they stick it out for 30 years, their pension is 75% of base pay.
The bill approved by the House would have no effect on those already in service or those who join before the measure becomes law. And pension benefits would remain unchanged for those with 30 years of service. But future members of the armed forces who leave after 20 years would receive pensions amounting to only 40% of their average pay for the highest five years.
The cost of the military pension system has increased sevenfold in inflation-adjusted dollars since 1960; the annual tab is expected to reach$18 billion next year. The change, if it becomes law, will produce an annualized $3.1-billion reduction in defense appropriations.
There is no question that the present system helps to encourage young enlistees and officers to stay in the service for those first 20 years. But there is also a built-in incentive for them to quit immediately thereafter. And that isn’t good for the taxpayers or the services, which lose highly trained technicians and managers at their peak.
The fellow who retires at age 38 or 40 with 20 years of service under his belt begins collecting his military pension immediately. He is still young enough to pursue a second, civilian, career and then to retire in his 60s with full Social Security benefits and, in most cases, with a company pension. As Aspin has observed, “There is a saying in the services that you’re crazy to stay longer than 20 years because you’re effectively working for only half pay after that.”
The statistics show that he is right. The average retirement age for members of the military is about 42. Retirees typically spend another 20 years in the work force.
If his bill becomes law, Aspin says, more people may leave the service before completing 20 years, but those who do stay for 20 years will be more likely to remain for 30--providing a “more experienced career force to handle the increasingly complex weapons systems we will be fielding in the future.”
Since 1969 the military retirement system has been the subject of nine major proposals for money-saving reforms, but nothing much happened until lately for two reasons: First, everybody agreed that cutting pension benefits for present retirees and for men and women already in the service would be a breach of faith. Second, this meant that pension reform wouldn’t show up as budget savings for 20 years--a fact that drastically reduced its political appeal to members of Congress.
By persuading Congress in 1983 to switch the military retirement system to accrual accounting, Aspin changed the political calculus by making it possible for cuts to be reflected in lower appropriations now. This greased the way for the pension-reform bill that was passed by the House last week--and that should now be enacted by the Senate.