During times of budget deficiencies and a down-turned economy, the military retirement system is evaluated in order to cut federal spending. 2011 is an example of a time of fiscal re-evaluation and possible reduction in veterans' retirement benefits.
On Nov. 17 2010, The Debt Reduction Task Force of the Bipartisan Policy Group, headed by former Senate Budget Committee chairman Pete Domenici, and Alice Rivlin, White House budget director during the Clinton administration, recommended changes to military retirement policy that would cut military retirement costs in half.
Similar recommendations to trim military retirement benefits were also been made by the National Commission on Fiscal Responsibility and Reform.
The proposed changes could apply to current military service members with less than 15 years of service.
RECOMMENDED CHANGES TO MILITARY RETIREMENT PLAN
The first change recommended by the Task Force is for military service members to start receiving retirement checks at age 57, rather than the current procedure of drawing checks immediately after completing active duty.
The second recommended change reflects the multiplier for calculating military retirement benefits. The recommended change is to calculate retirement benefits using the highest five years of consecutive service as the multiplier. This is in contrast to the system which calculates retirement benefits on the highest three years of military basic pay.
The third recommended change would result in smaller increases to the Cost of Living Adjustments (COLA) in military and federal civilian retired pay and Social Security. The recommended formula would disregard price increases in some goods and services if cheaper alternatives are available to military service members.
MILITARY RETIREMENT AND MILITARY BUDGET DEBT
The Debt Reduction Task Force recommended cuts to military retirement benefits add up to a calculated $131 billion in savings by 2040. The new plan wouldn't show significant savings until 2017.
Changes in military retirement calculations always require congressional approval. These fiscal recommendations contained in these two reports from the Debt Reduction Task Force and National Commission on Fiscal Responsibility and Reform are on the Congressional agenda for 2011. Stay tuned to Military Hub for updates. If you are retired or planning to retire from the military, these changes will affect you and your family for many years to come.