Uncle Sam Wants You … to Enroll in a 401(k)If Social Security is the "third rail of politics" (touch it and you die), then military pensions are a high-voltage wire dangling over a shark tank. A politician would need a death wish to even acknowledge the possibility of cutting the pensions of the brave men and women who fought for their country. Except that it turns out that 83 percent of the brave men and women who fought for their country never see a dime of retirement benefits. They leave the military before putting in the required 20 years it takes for pensions to vest. For taxpayers, this is fortunate. The 17 percent who do stay in and draw pensions will cost the nation $46 billion this year. According to a study released last summer by the Defense Business Board, a private-sector advisory committee, "Costs are rising at an alarming rate; future liability will grow from $1.3 trillion (of which $385 billion is funded) to $2.7 trillion by fiscal year 2034." A young man who enlisted in the Army out of high school in 1991 was bumped up the promotion ladder and retired this year as a master sergeant will find himself, at age 38, drawing a pension of roughly $25,000 a year. With cost-of-living adjustments at an inflation rate of 3.5 percent, by the time he is 65, he will be pulling down $65,000 a year. Of course, in most cases, he will have survived the Gulf War and several tours in Afghanistan and/or Iraq in positions of increasing responsibility. You can't argue that he hasn't earned it. The Defense Business Board argues that the military retirement plan is unaffordable and "will seriously undermine future military warfighting capabilities." The DBB argues that the Pentagon should do what most private businesses have done: Replace their defined-benefit (pension) plans with defined-contribution [401(k) or similar] plans.
A retiree would have to wait until he was 60 or 65 to access his retirement account, rolling it over into the retirement plans of whatever civilian job he manages to find, assuming he finds one. Defense Secretary Leon Panetta has acknowledged that with the Pentagon facing huge budget cuts, pension reform will be on the table. But he has pledged that those now serving would not be affected by any changes. As part of the 10-year deficit reduction deal reached between President Barack Obama and Congress, the congressional "super-committee" must trim the Pentagon's budget by $400 billion — or see $900 billion in cuts if it fails. Choosing between favored programs and the future retirement benefits of kids who are still in high school is a no-brainer for the generals, admirals and their patrons in Congress. But before anyone tinkers with the military retirement system, he'd better consider what kind of fighting force he'd get in return and what he expects that force to do. That 38-year-old retired master sergeant we mentioned above and his fellow career non-commissioned officers are the people who make the all-voluntary military work. If you're going to tinker with their incentives, you do so at your peril. And the nation's. REPRINTED FROM THE ST. LOUIS POST-DISPATCH DISTRIBUTED BY CREATORS.COM
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