Pentagon considering changing retirement benefits

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tazzygirl -> Pentagon considering changing retirement benefits (8/16/2011 9:29:07 AM)
A sweeping new plan to overhaul the Pentagon’s retirement system would give some benefits to all troops and phase out the 20-year cliff vesting system that has defined military careers for generations. In a massive change that could affect today’s troops, the plan calls for a corporate-style benefits program that would contribute money to troops’ retirement savings account rather than the promise of a future monthly pension, according to a new proposal from an influential Pentagon advisory board. All troops would receive the yearly retirement contributions, regardless of whether they stay for 20 years. Those contributions might amount to about 16.5 percent of a member’s annual pay and would be deposited into a mandatory version of the Thrift Savings Plan, the military’s existing 401(k)-style account that now does not include government matching contributions. A critical new feature would adjust those contributions to give more money to troops who deploy frequently, accept hardship assignments or serve in high-demand jobs. It would also give the services a new lever to incentivize some troops to leave or stay on active duty longer. The new proposal was unveiled July 21 by the Defense Business Board, the wellspring for many cost-saving initiatives adopted by the Defense Department in recent years. The new retirement plan would mark the biggest change in military retirement in more than 60 years and require approval from Congress. “The current system is unfair, unaffordable and inflexible,” said Richard Spencer, a former finance executive and Marine Corps pilot who led the board’s eight-month retirement study. This alternative plan would “enhance the ability of the service member to build a meaningful retirement asset [with] complete flexibility for their lifestyle or desires,” Spencer said. http://www.armytimes.com/news/2011/07/military-dod-panel-calls-for-radical-retirement-overhaul-072511 For those of you who have served... or family members of the same... what say you?

DomKen -> RE: Pentagon considering changing retirement benefits (8/16/2011 9:50:59 AM)
Was just reading about this plan. For those who don't serve 20+ years it would be a positive. For those that serve 20+ it would take what was a guaranteed paycheck, presently retirees are paid a percentage of their reitrement paygrade for life, and turn it into a glorified savings account dependent on the stock market or other investments with no guarantee of life time income. I think it needs a lot of work. The 20+ year enlisteds are the backbone of the service and we need those experienced soldiers and sailors and this plan would disincetivize staying in that long.

tazzygirl -> RE: Pentagon considering changing retirement benefits (8/16/2011 10:04:23 AM)
So, in your opinion, there would no longer be an incentive to make a career of the military.

DomKen -> RE: Pentagon considering changing retirement benefits (8/16/2011 10:40:25 AM)
quote: ORIGINAL: tazzygirl So, in your opinion, there would no longer be an incentive to make a career of the military. Less of an incentive certainly.

tazzygirl -> RE: Pentagon considering changing retirement benefits (8/16/2011 10:43:11 AM)
I suppose, in my view, they are trying to run it more like a business. Putting money into a 401k plan sounds like a great idea.... until the market bottoms out.

Iamsemisweet -> RE: Pentagon considering changing retirement benefits (8/16/2011 11:16:48 AM)
This is unfortunate, but the fact is, all public retirement systems need to be reexamined, not just the military's. I don't think we can afford guaranteed benefits at any level of government any longer, and I imagine federal and state pensions will begin to look more like 401Ks than they have in the past. This is another experiment that didn't work.

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 11:18:19 AM)
Its a bad idea in the private sector, and a bad idea in the military and the rest of the public center.

DomKen -> RE: Pentagon considering changing retirement benefits (8/16/2011 1:22:59 PM)
quote: ORIGINAL: willbeurdaddy Its a bad idea in the private sector, and a bad idea in the military and the rest of the public center. If, as you claim, pensions are a bad idea and Social Security is a bad idea then how precisely should people fund retirement? 401(k)'s and the like have already been proven to do a very poor job at allowing people to retire. Are you an advocate of people working until they die?

rulemylife -> RE: Pentagon considering changing retirement benefits (8/16/2011 1:44:00 PM)
quote: ORIGINAL: tazzygirl I suppose, in my view, they are trying to run it more like a business. Putting money into a 401k plan sounds like a great idea.... until the market bottoms out. 401K's were never a great idea. They were a way for businesses to pawn off pension obligations. The same thing that is happening here in a modified form.

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 1:46:22 PM)
quote: ORIGINAL: DomKen quote: ORIGINAL: willbeurdaddy Its a bad idea in the private sector, and a bad idea in the military and the rest of the public center. If, as you claim, pensions are a bad idea and Social Security is a bad idea then how precisely should people fund retirement? 401(k)'s and the like have already been proven to do a very poor job at allowing people to retire. Are you an advocate of people working until they die? No, I didnt say pensions were a bad idea, I said the the switch to DC plans is a bad idea. They are woefully inefficient.

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 1:47:29 PM)
quote: ORIGINAL: rulemylife quote: ORIGINAL: tazzygirl I suppose, in my view, they are trying to run it more like a business. Putting money into a 401k plan sounds like a great idea.... until the market bottoms out. 401K's were never a great idea. They were a way for businesses to pawn off pension obligations. The same thing that is happening here in a modified form. Actually they were a way for businesses to avoid unrealistic accounting rules.

rulemylife -> RE: Pentagon considering changing retirement benefits (8/16/2011 1:57:43 PM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: rulemylife quote: ORIGINAL: tazzygirl I suppose, in my view, they are trying to run it more like a business. Putting money into a 401k plan sounds like a great idea.... until the market bottoms out. 401K's were never a great idea. They were a way for businesses to pawn off pension obligations. The same thing that is happening here in a modified form. Actually they were a way for businesses to avoid unrealistic accounting rules. Elaborate.

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 2:15:48 PM)
quote: ORIGINAL: rulemylife quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: rulemylife quote: ORIGINAL: tazzygirl I suppose, in my view, they are trying to run it more like a business. Putting money into a 401k plan sounds like a great idea.... until the market bottoms out. 401K's were never a great idea. They were a way for businesses to pawn off pension obligations. The same thing that is happening here in a modified form. Actually they were a way for businesses to avoid unrealistic accounting rules. Elaborate. FAS 87 forced companies to recognize pensions on the balance sheet based on current rates of interest, rather than long term investment rates of return, which is their true economic value. Pensions also became an income/expense item that resulted in fluctuations in interest rates resulting in "profits and losses" that had nothing to do with the core business' earning potential. Managing pension plans became more critical than managing the core business for many companies, wasting the time and resources of senior executives who should have been focusing on making widgets, not fighting their accountants and rating agencies over artificial "marked to market" pension liabilities.

DomKen -> RE: Pentagon considering changing retirement benefits (8/16/2011 2:20:22 PM)
quote: ORIGINAL: willbeurdaddy quote: ORIGINAL: DomKen quote: ORIGINAL: willbeurdaddy Its a bad idea in the private sector, and a bad idea in the military and the rest of the public center. If, as you claim, pensions are a bad idea and Social Security is a bad idea then how precisely should people fund retirement? 401(k)'s and the like have already been proven to do a very poor job at allowing people to retire. Are you an advocate of people working until they die? No, I didnt say pensions were a bad idea, I said the the switch to DC plans is a bad idea. They are woefully inefficient. So the 'it' in your first post was the new plan. Makes much more sense now.

outhere69 -> RE: Pentagon considering changing retirement benefits (8/16/2011 4:25:59 PM)
Seems like it would be a hell of a lot more expensive to go 401k-style. There's going to be a bunch more money walking out the door, since there are a whole lot of folks who bail out with less than 20 years. BTW, it's been mentioned many times before that the feds did away with the "old school" civil service pension back in 1987.

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 4:38:06 PM)
quote: ORIGINAL: outhere69 Seems like it would be a hell of a lot more expensive to go 401k-style. There's going to be a bunch more money walking out the door, since there are a whole lot of folks who bail out with less than 20 years. BTW, it's been mentioned many times before that the feds did away with the "old school" civil service pension back in 1987. A 20 and out pension of 50% of pay at age 50 is extremely expensive, much moreso than any 401(k) style contribution they might make.

tazzygirl -> RE: Pentagon considering changing retirement benefits (8/16/2011 4:42:08 PM)
But the 401k's are riskier, no?

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 4:44:36 PM)
quote: ORIGINAL: tazzygirl But the 401k's are riskier, no? for the individual, no risk at all for the sponsor.

tazzygirl -> RE: Pentagon considering changing retirement benefits (8/16/2011 4:46:33 PM)
So riskier for the serviceman/woman... but not for the military.

willbeurdaddy -> RE: Pentagon considering changing retirement benefits (8/16/2011 4:47:47 PM)
quote: ORIGINAL: tazzygirl So riskier for the serviceman/woman... but not for the military. Yup

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