13 November 2014 Legislative News Update
weekly electronic newsletter, and is published
every Monday when Congress is in session.
In this issue:
- Military Retirment Study Released
- Call to Action!
- Veterans' Care Card Program Kicks Off
MILITARY RETIREMENT STUDY RELEASED
A study released this week concluded that the current military retirement system is “inefficient because it places too much compensation in the form of deferred payments.”
The Rand Corporation’s study outlined three deficiencies they claim are in the current system:
· Because service members do not receive retirement benefits unless they have served for 20 years, most members (about 86 percent of officers and 66 percent of enlisted personnel) receive no benefits.
· The military compensation system emphasizes compensation in the form of deferred payments, despite the fact that the typical service member is young and has a preference for current over deferred compensation. As a result, compensation costs are higher than necessary.
· The vesting point at 20 years of service and immediately available retirement benefits induces similar career lengths in all occupational specialties, but optimal career length may well differ by occupational specialty.
The Rand report offered details of a hybrid system that would combine elements of a defined-benefit plan (the military's current system) and a defined-contribution plan which is similar to the civilian sector’s 401K retirement system. While the government does offer service members the option of investing money in the Thrift Savings Plan (a retirement savings and investment plan for Federal employees), it does not offer matching contributions.
“Earlier vesting (before 20 years of service) in the proposed system can improve equity by increasing the likelihood that a service member will become vested. A hybrid plan can increase efficiency and enable the services to flexibly manage the force via decisions about how the defined-benefit element is computed, how retirement eligibility criteria are defined, and when payouts are made.”
The Military Compensation and Retirement Modernization Commission, who is also conducting a comprehensive review of military compensation and benefit programs, will make their recommendations to Congress and the Administration on February 1, 2015.
AUSA President Gen. Gordon R. Sullivan, USA, Ret., and Vice President for Education, Lt. Gen. Guy Swan met with the commission on several occasions and addressed some of the more popular misconceptions such as those related to the “unaffordable and unfair” military retirement system.
Fact: Retirement costs as a percentage of pay have remained nearly constant over time.
Fact: The 20-year retirement system that has been in place for generations ensures that enough mid-career service members tolerate the hardships of military life and the strain of war to preserve a core of experienced, ready personnel for the future force.
o It is more cost-effective to keep a trained service member than to grow a new one. It takes five to eight years to create a professional noncommissioned officer or junior officer.
o It is impossible to “build” a seasoned service member rapidly. Experienced professionals must be motivated to remain in service; they are irreplaceable.
o Fact: The relatively mild “REDUX” cuts of the 1980s had serious negative effects on readiness, recruitment and retention and ultimately had to be repealed.
o The nation’s economic downturn has helped provide a steady supply of military recruits recently. But historically, when the economy improves (as it did during the 1990s), recruitment challenges directly impact the readiness of the force.
The bottom line: There is little to no popular support for a draft—and drafts compel only initial service, not career service. The compensation system must successfully (1) induce and (2) retain volunteers to accept a profession of hardship and danger.
We are eager to see what recommendations the Commission offers to Congress. Any major changes to the military retirement system will have to be made by them.
We are also interested in your opinion on the current military retirement system. Drop us a line at [email protected].
CALL TO ACTION!
Congress returns this week for the lame duck session. It is imperative that they pass an omnibus spending package and not another continuing resolution!
We have an AUSA-suggested letter available on the Contact Congress link on our website http://capwiz.com/ausa/home/. The letter titled “Pass a FY 2015 Omnibus Bill!” urges the House and Senate to work together and pass this critical bill. Please use this letter and let your members know that this is important to you.
VETERANS’ CARE CARD PROGRAM KICKS OFF
The Veterans Access, Choice, and Accountability Act of 2014, passed into law this summer, included a provision that will allow some veterans to receive health care in their communities rather than waiting for a VA appointment or traveling to a VA facility.
As part of the new program, the VA has started issuing a Veterans’ Choice Card to every veteran who is potentially eligible for the new, temporary health benefit.
The Choice Card will allow veterans to elect to receive care outside of VA when they qualify for the new program based on the distance of their residence from a VA care facility, or when wait times for VA health care exceed the standards established in law.
The Choice Card does not replace the identification card veterans already use to access other VA benefits, and will be issued in three phases.
1. The first group to receive Choice Cards along with a letter explaining eligibility are veterans who may live more than 40 miles from a VA facility.
2. The next group are veterans who are currently waiting for an appointment longer than 30-days from their preferred date or the date determined to be medically necessary by their physician.
3. The final group of Choice Cards and letters will be sent between December 2014 and January 2015 to the remainder of all veterans enrolled for VA health care who may be eligible for the Choice Program in the future.
For more information, visit the VA link at www.va.gov/opa/choiceact.