Money, Military Retirement - Army Times

U.S. Military (Ret.): Weighing pros and cons of a ‘benefits menu’

I recently came across a report by James Carafano of the Heritage Foundation titled: “A Rucksack for U.S. Military Personnel: Modernizing Military Compensation,” which addresses how to best compensate service members to maintain the force as manpower costs continue to grow and put pressure on other areas of the defense budget.

This report — and others in recent years — make a case that the current compensation system is too heavily weighted toward in-kind and deferred compensation over direct cash compensation.

The suggested fixes for this have run along the lines of some sort of “menu” model, in which you could choose which benefits you’d want and be compensated in cash for the benefits you may not want or need.

So far, this has been a theoretical discussion. But we may be nearing the point at which something fundamental has to change.

Retired Cmdr. Peter Gregory recently wrote to me: “The Defense Department is getting to the point where it may admit that the all-volunteer, full-time professional military is too expensive to fund and maintain in its current form and size. These trends will become more apparent in the next few years.”

Sooner or later, the wars in Iraq and Afghanistan will wind down, Gregory said, and wartime supplemental funding — which has helped cover a fair portion of military manpower costs in recent years — will dry up.

“That is when the chickens will come to roost,” he said.

And it’s not unrealistic to think that the military retirement community likely will be among the first targets of opportunity for any efforts to reduce benefits or increase out-of-pocket costs.

The natural inclination is to hold the line on any cuts in our hard-earned benefits. But if you accept the argument that the military’s manpower costs are reaching levels that may well be unsustainable, particularly in the last few years as Congress has showered new pay and benefits initiatives on the wartime force, the question then becomes, what might we be prepared to give up, if it comes to that?

Take health care. Proponents of the “benefits menu” model say, for example, that if a retiree’s post-service employer provides good coverage and the retiree agrees not to use Tricare, he might receive some level of additional cash compensation in his retirement pay, and the government saves money by not having to cover the cost of his Tricare benefits.

Similarly, a retiree conceivably could forgo commissary and exchange privileges in return for a bump in retirement pay.

Personally, I have a hard time with the idea that promises made to those who have already served should be broken in retirement — which argues for some sort of grandfathering of benefits for current retirees, with any changes affecting only future retirees. But of course, that means the cost savings of such changes would not be realized for a while.

No easy answers. Let me know what you think and I’ll publish some of your responses.