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July 23, 2015

BAH Cuts
The Fleet Reserve Association (FRA) adamantly opposes provisions in the 2016 Senate National Defense Authorization Act (S. 1376) that aim to cut Basic Allowance for Housing (BAH) from the original 99 percent to 95 percent of average housing cost. The legislation also includes a provision that will only allow the higher ranking member of a dual-service couple to draw BAH.

FRA believes across-the-board reductions to BAH rates will negatively impact all service members and is calling for lawmakers to maintain the current rate of 99 percent of average housing costs for each geographic area.  Dual-service couples (where both spouses are in the military) will suffer even more if one member of the family becomes ineligible to receive BAH.

Under current law, both members of a dual-service couple assigned to the same location can draw BAH at the “without dependents” rate. If a couple has a child, the most senior ranking member of that couple can draw BAH at a higher “with dependents” rate; the other member continues to draw BAH at the lower “without” rate. BAH has become a key element in helping military compensation keep pace with civilian pay  and FRA believes that changing the law to reduce this benefit for married service couples would create a financial hardship for these service members.

To put it in perspective, an E-6 living in the DC Metro area receives $2,016/month as a single service member. An E-7 in the same area rates $2,148/month. If they were to get married under the proposed law, the E-7 would get $2,553 in monthly BAH and the E-6 would get $0. Therefore, they would bring in $1,611/month less by getting married—$19,332 less a year—which does not count the proposed overall cuts from 99 to 95 percent. However, if the same two service members each married civilians, their monthly BAH would both be at the “with dependent” rate, totaling $2,463 for the E-6 and $2,553 for the E-7. This scenario is equivalent to having two civilian employees working for the same company; they marry each other and then the company cuts the lower-paid employee’s salary. A question that should be asked here is: Why should service members be subjected these cuts when civilians aren’t?

Master Chief Petty Officer of the Navy (MCPON) Michael Stevens, the Navy’s top enlisted Sailor, stated that “ending the current system which provides separate housing funds to active duty spouses living in the same home could be devastating to military families.” President Obama also voiced strong opposition to the proposal and said that targeting cuts to BAH would “impose a marriage penalty.”

FRA is against these provisions and would like you to stand with us in opposition. Please contact your representatives and visit the FRA Action Center (action.fra.org/action-center) to voice your opposition to these proposals.

Retirement Reform
For the first time since the start of the all-volunteer force, Congress is also considering changing, the way service members are compensated for their years of service.  Both the House and Senate versions of the FY 2016 National Defense Authorization Act (NDAA) include a plan to revise the military retirement system, which means there is a very high probability some of these proposed changes will become law.

Military retirement currently carries an all-or-nothing pension plan that requires a minimum of 20 years of service. A new “blended defined benefit and defined contribution” retirement plan is being proposed for career service members that would cut retired (or retainer) pay from 50 to 40 percent of basic pay for those who serve between 20 and 30 years, and cut pensions from 75 to 60 percent for those who serve 30 years or more.  To compensate for this reduction, the plan would require each branch of service to provide a one-percent employer contribution to the Thrift Savings Plan (TSP), the federal employee equivalent to a 401(k) account.  This contribution would be made even if the service member declines to participate. But if service members elect to contribute to the TSP, DoD will match service members’ contributions up to four (Senate plan) or five percent (House proposal). The new retirement rules, if enacted, would affect all service members who join after the blended plan is implemented in October 2017. Service members serving before implementation will have the choice to opt into the new plan or stick with the current system. 

While this might sound like a reasonable plan, FRA opposes these retirement proposals as they reduce benefits for retirees with 20 or more years of service in order to provide retirement benefits to those who serve as little as two years. FRA believes this reduction will be a disincentive for future career military personnel and, while FRA supports proposed benefits for those who serve less than 20 years, we adamantly oppose the reduction of benefits for careerists who serve 20 years or more.

 

Stephen TassinAbout OnWatch

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.