8 April 2015 Legislative News Update

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Wednesday, April 08, 2015

weekly electronic newsletter, and is published 
every Thursday when Congress is in session.







THE HOUSE ARMED SERVICES COMMITTEE will mark-up the fiscal 2016 defense authorization bill Wednesday, April 29, with subcommittee markups to occur April 22 and 23. 

Even after holding several hearings related to the recommendations put forth by the Military Compensation and Retirement Modernization Commission, it is still unclear if the committee will adopt any of them.

SMA Kenneth Preston, USA Ret., AUSA’s Director of Noncommissioned Officer & Soldier Programs and the 13th Sergeant Major of the Army along with other retired senior enlisted officers penned a commentary that appeared in this week’s Army Times.  In it, Preston and the other leaders urged caution on acting on the commission’s proposals. 

Here is the commentary:

“We have had the opportunity to read the final report of the Military Compensation and Retirement Modernization Commission that was recently published.  While wearing the uniform, our role as senior enlisted leaders was to “speak truth to power” to the leadership of our respective military services, provide a deck plate on-the-ground perspective, and represent the military members and their families of all services to the senior levels of our military organizations and, when asked, to our elected representatives.

“From time to time, even from retirement, we feel that it’s important to speak out on matters significant to the soldiers, sailors, Marines, airmen and Coast Guardsmen who we remain committed to serving.

“We have no reason to question the findings in the commission’s proposal.  The commission’s report is complex and far-reaching.  We applaud the efforts of the commission members to find ways to reward military members who have not served an entire retirement-eligible career with credit prior to the 20-year mark.

“However, taken as a whole there may be well-meaning, but unintended consequences embedded in many of the commission’s recommendations and urge caution as Congress considers the Commission’s proposals.  Nearly all literature written by the commission or proponents of the recommendations so far presents an extremely optimistic view of everything that is proposed.  As stated above, we do not want to be seen as being critical, but we would like to offer an additional perspective on these recommendations, which if enacted fully could have major impacts on military members and their families far into the future.

“Recommendation 1:  Help more service members save for retirement earlier in their careers, leverage the retention power of traditional uniformed services retirement, and give the services greater flexibility to retain quality people in demanding career fields by implementing a modernized retirement system.

“Recommendation 1 is a worthy goal.  However, the specific changes recommended would be a major departure from the military’s longstanding defined benefit retirement system and any implementation of the proposal should be approached with caution.

“While the recommendation retains the 20-year cliff-vesting in our current system, it also presents elements that could be described as “giving a little” to service members early in their career in exchange for what could be a large decrease in benefits later.

“In order to achieve the projected benefit totals in the commission’s report, a service member would have to make exactly the right decision at several career decision gates.  As retired career military members, we know from experience that decisions regarding retirement planning are not usually a priority for most active duty members.  Our junior service members are often faced with family needs, challenges and emergencies that could make the decision to use their continuation pay on something other than investment very appealing.

“In the same way, the option to contribute the maximum to the Thrift Savings Plan could be unheeded by service members stressed for resources to run their households and focused on the mission rather than their own and their family’s future.  During the last 14 years, service members have been subjected to extremely long, arduous, almost back-to-back deployments.  There is no real reason to believe that such deployments will stop anytime soon.  Service members working in these conditions must focus completely on the mission.  Anything else, including retirement planning, is a distraction from meeting their mission requirements.

“The commission’s recommendations only become beneficial if multiple factors line up perfectly.  For example, the right funds need to be chosen, and these funds need to remain untouched by service members until retirement age, regardless of major life events that might demand instant access to funds earmarked for retirement.  This brings us to our second major topic.

“Recommendation 3:  Promote service members’ financial literacy by implementing a more robust financial and health benefit training program.

“Judging by the past, financial literacy has often been an afterthought in most of our military’s training programs, or as a counseling tool after uninformed financial decisions are made that affect good order and discipline.

“If the recommendations regarding the retirement system are implemented, Recommendation 3 becomes extremely critical.  Shifting the burden of the retirement system into a program that requires service members to make certain choices in order to achieve a positive outcome requires training, education and planning.  We strongly advise that any retirement system changes be accompanied by a standard, effective training program.

“Any initiative should be constructed with a platform to facilitate knowledge, education and communication and should include: 

1) Spousal financial education through literature, online or formal education.

2) Professional financial counseling and planning.

“The program should amplify financial management to service members throughout the military life cycle model and should be mandatory and available at multiple gates in a member’s career.  Financial education can be considered many ways.  A class as simple as balancing a checkbook could qualify, but because that wouldn’t offer sufficient financial training required to manage funds intended for a post-military career or retirement, we recommend that this subject be evaluated fully and the stipulations of these classes be outlined and held inclusively across the services.

“We strongly believe that America’s all-volunteer military is the greatest military force in the world today.  This greatness has been achieved through the focused efforts and sacrifices of all military members and their families.  Our current retirement plan does not require military members to worry about this part of their future.  If retirement system changes are made, steps must be taken to ensure that our military members are not shortchanged at the end of their careers.”

- See more at: http://www1.ausa.org/legislation/newsletter/Pages/8April2015LegislativeN...