Amid ongoing budget battles and strategy scrutiny the Department of Defense made more waves this week by introducing proposals for dramatic change in the military retirement system. In a white paper submitted to the Military Compensation and Retirement Modernization Commission (MCRMC), the Department outlined two distinct design concepts described as a “hybrid military retirement system."
In a phone call with several military service organizations, DoD planners were careful to avoid outright endorsement of either option, instead underscoring the requirement put forward by the Bipartisan Budget Act of 2013 for the Department to transmit its views on modernizing the current system. DoD authors said they aimed to retain a defined benefit while also including a modest defined contribution benefit that allows for some amount of portability. Additionally, the concepts shift some compensation from deferred (post-retirement) compensation to current compensation (supplemental pays), and streamline disability retirement and the survivor benefit program.
For Reservists, the proposal delivers two options as little more than an afterthought (buried in the last paragraph of the report). Keep the current system, or adopt supplemented recommendations from the Quadrennial Review of Military Compensation (QRMC). The QRMC advocates transitioning the Reserves to a regular military compensation (RMC) model; a plan which offers the promise of earlier Reserve retirement offset by dramatic changes to drill pay.
While the MCRMC’s final recommendations are not due until Feb 1, 2015, the complexity and interconnectivity of the issues before the Commission are stacking up with serious implications for recruiting and retention. While the Reserve community weighs its options carefully, advocates like ROA are committed to ensuring the RC is thought of as more than a footnote when the final report is delivered.