January 15, 2015
The Military Compensation and Retirement Modernization Commission (MCRMC) is scheduled to release its recommendation in February 2015. The MCRMC was established by Congress in 2013 to study all aspects of military compensation and tasked to suggest reforms that will ensure the long-term viability of the All-Volunteer Force, foster recruitment, sustain retention and modernize military compensation.
The commission’s recommendations will be aimed solely at future service members, retirees and veterans. Congress, however, has no such restriction and could enact legislation based on the recommendations that would be retroactive to include all past and present service members, as well. Congress may be tempted to enact benefit cuts that would make it easier for the Department of Defense (DoD) to meet the mandated budget cuts required by the Budget Control Act (BCA) of 2011 (i.e., sequestration). The BCA requires that half of these cuts come from Defense, even though Defense only makes up 17 percent of the overall federal budget.
Benefit cuts, according to a recent Navy retention study, would be detrimental to military retention. According to the study, if the 20-year retirement plan were to change, 75.8 percent of enlisted personnel and 80.9 percent of officers would be more likely to leave military service earlier—a highly significant number. Also, 80 percent rank the current retirement system and 74 percent rank pay and compensation as two of the most important reasons to remain in uniform.
One proposal that’s expected from the report is a hybrid retirement plan, which may include a 401K-type plan and a reduced retirement after a set number of years. The hybrid approach may reduce the current defined benefit plan for career service members and create a new benefit for those with less than the required time to retire (20 years).
According to Military Times, DoD has set up a response plan to quickly analyze the potentially controversial proposals in the report and to send its recommendations to President Obama within 60 days of the report’s release. Even though the Pentagon wants to see changes that cut personnel costs so they can invest more in research and new weapons systems, they are worried that these cuts would have a devastating impact on recruitment and retention, and would threaten the long-term health of the 41-year-old All-Volunteer Force.
FRA met with the MCRMC and expressed our concerns about the civilianization of military benefits it is likely to propose in its report. The Association is concerned about the impact on recruitment, retention, force management, and long-term cost implications. Service members are already faced with more challenges than workers in the civilian population—e.g., being unable to sustain spouse employment, children constantly changing schools and the inability to gain equity in a home. FRA believes that the greater sacrifices made by our service members deserve greater rewards and remains committed to protecting and enhancing current benefits.
2015 Basic Pay/BAH Rate
Military pay raises have been capped at one percent for 2015, which is 0.8 percent below private sector wage growth. This follows an identical pay cap set in 2014, which was the lowest basic pay increase since the dawn of the All-Volunteer Force (AVF) in 1973. The Pentagon plan extends the one-percent pay cap through 2017, rising to 1.5 percent in 2018 and to 1.8 percent in 2019. If enacted, these caps will continue to increase the gap between military and private-sector pay.
DoD also released the new rates for Basic Allowance for Housing (BAH) for 2015, which reflect an average increase of $17 per month. This amounts to an average increase of 0.5 percent, despite the removal of renters insurance (approximately one percent) from the calculation for determining the new rate.
If the BAH rate for your geographic area decreases, your allowance will not be adjusted until you make a permanent change of station (PCS). At that time, you will receive the BAH rate for your new duty station.
FRA continues its work to close the gap between military and the private-sector pay, and supports adequate housing allowances to provide safe, quality housing for service members and their families.
FRA Launches 2015 Survey on Military, Veterans Benefits
As part of its mission to bring the concerns of enlisted personnel to Capitol Hill, FRA is conducting an online survey to determine which military and veterans’ benefits are most important to active duty and Reserve personnel, retirees, veterans and their families. The brief survey, available at www.fra.org/survey, asks current and former members of the uniformed services and their spouses to rate the importance of various benefits and quality-of-life programs associated with their service to our nation.
Survey responses and comments from participants provide important reference information when we testify before Congress or meet one-on-one with lawmakers and their staff. FRA shares the survey results with elected officials on Capitol Hill, key committee staff, and leaders within the Departments of Defense, Homeland Security and Veterans Affairs—ensuring these crucial decision-makers understand the enlisted sea service perspective.
Visit www.fra.org/survey to let FRA know
which military and veteran benefits are most important to you!
OnWatch is a quarterly news update for active duty and Reserve personnel, written by Stephen Tassin. He recently transitioned from active duty to service as a Chief Warrant Officer 2 in the Marine Corps Reserve Force, and has a personal interest in these matters. As the assistant director of Legislative Programs for the Fleet Reserve Association (FRA), he’s also committed to FRA’s mission to maintain and improve the quality of life for Navy, Marine Corps and Coast Guard personnel and their families. He looks forward to keeping you up to date on FRA’s legislative efforts to protect and enhance your earned military and veterans’ benefits.