Today's military members serve under the traditional 20-years-or-bust retirement plan, which has been prized by generations of retirees.One of the unexpected benefits is intriguing:
That plan isn't going away for the current force. But a new plan might be offered as a voluntary option, promising at least some retirement benefits to many members who don't expect to serve 20 years
Features of the new plan include government matching of Thrift Savings Plan contributions made by members, not to exceed 10 percent of basic pay. Full vesting in these 401(k)-like accounts could occur after only five years of service.
The plan also would offer full vesting in a retirement benefit after just 10 years of service. The current annuity formula of 2.5 percent of basic pay for each year served would apply. So a 10-year retiree would get 25 percent of retired pay. The catch - and it's a big one - is that retired pay wouldn't start until age 60.
Careers as long as 40 years would be allowed, and a 40-year retiree would draw 100 percent of basic pay. But ending for future generations of service members would be immediate annuities after 20 or more years.
To entice enough members to serve 20, 30 or 40 years, the plan calls for special "gate pays" - extra income at strategic points along a member's career path.
The committee used a computer model developed by the Rand Corp. to apply features of the proposed retirement plan to the Army's force structure. It did so to learn how the Army's force profile might change.More options for Sailors, and more experienced Sailors serving, to boot? Sounds like a good idea to me.
Pilling said, "We found that under this retirement plan, retention improves in the Army, the number of people (staying) five to 10 years increases and (recruit) accession demand goes down. So that encourages us to think that there really is something here."
"Wouldn't you rather have a force today - all other things being equal - that has more second-term people and fewer first-term people?" committee member and former deputy defense secretary John P. White asked. "Suppose I was able to reduce my Army (recruiting) need by 20 percent. It would make a significant difference, right?"
Open posted in Mudville.