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Panetta: Any Retirement Changes Won’t Affect Serving Military

By Jim Garamone
American Forces Press Service

WASHINGTON, Aug. 19, 2011 – In his clearest statement on the subject to date, Defense Secretary Leon E. Panetta said today that if the military retirement system changes, it will not affect serving service members.

“I will not break faith,” the secretary said during a roundtable meeting with military media representatives in the Pentagon.

Panetta’s predecessor, Robert M. Gates, asked the Defense Business Board to look at the military retirement system and make recommendations. The final report is due later this month, but Panetta said he is familiar with the outlines of the proposal.

“I certainly haven’t made any decisions” on retirement, he said.

“People who have come into the service, who have put their lives on the line, who have been deployed to the war zones, who fought for this country, who have been promised certain benefits for that -- I’m not going to break faith with what’s been promised to them,” Panetta said.

People in the service today will come under the current retirement system, which gives retirees 50 percent of their base pay after 20 years of service.

“Does that stop you from making changes?” Panetta asked. “No, because obviously you can ‘grandfather’ people in terms of their benefits and then look at what changes you want to put in place for people who become members of the all-volunteer force in the future.”

One aspect of the retirement issue is one of fairness, the secretary said. Most service members do not spend 20 years in the military and therefore do not get any retirement benefits when they leave the service.

“They are not vested in any way,” Panetta said. “The question that is at least legitimate to ask is, ‘Is there a way for those future volunteers to shape this that might give them better protection to be able to have some retirement and take it with them?’”

Health care is another area that has to be dealt with, the secretary said. In fiscal 2001, the DOD health care bill was $19 billion. It is more than $50 billion now, he said, and it soars to the neighborhood of $60 billion in future years. Among proposals Congress is contemplating is an increase in some TRICARE military health plan premium payments.

“I think those recommendations make sense,” Panetta said. “Especially with tight budgets, it does make sense that people contribute a bit more with regards to getting that coverage.”

The Defense Department -- which is responsible for a large part of the nation’s discretionary budget -- will do its part to reduce the budget deficit, the secretary said. But while Defense has a role to play, he added, Congress has to deal with the more than two-thirds of the federal budget that represents the mandatory spending.

“If you are serious about getting the deficit down,” Panetta said, “you have to deal with the mandatory side of the budget and taxes.”

DOD has a responsibility to look at all aspects of the budget, the secretary said, and officials at the Pentagon are doing that.

“This is not because it is necessarily going to hurt areas,” he added, “because frankly, a lot of this can be done through efficiencies, a lot of it can be done looking at the administrative side of the programs: what can we do to make these programs more efficient?”

The secretary said he believes the budget crunch can represent an opportunity to make DOD a more efficient, effective and agile force that still can deal with the threats of the future.

The department also needs to ask how to provide benefits for troops and their families that will be effective at ensuring the nation always has a strong volunteer force, Panetta said.

“That’s a debate and discussion that it’s important for the Defense Department to have, the White House to have, the Congress to have and the country to have,” he said. “[We] need to have that debate about ‘How are we going to do this in a way that maintains the best military in the world?’”

The Defense Department will face some tough choices, Panetta acknowledged.

“I think the bottom line is this can be an opportunity to shape something very effective for the future that can still represent the best defense system in the world,” he said.


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Leon E. Panetta

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Article is closed to new comments.

The opinions expressed in the following comments do not necessarily reflect those of the U.S. Department of Defense.

9/6/2011 1:50:23 PM
I don't mind the whole new layout for the defined contribution plan, if it is for sure going to help reduce the nation's deficit because I contribute to my own retirement in a private account anyway. That's just smart planning. However, it would be nice to know that leaders are not looking for an easy tartget and that the Federal Government is looking at their retirement benefits and pay to help reduce the deficit as well. That's where the biggest push back will come from because of the sense of entitlement and the power held in those positions. Lead by example and make cuts on non essential Government positions, compensation and benefits.
- MSgt S, Marines

8/30/2011 5:25:22 PM
This is bad news. This will cost Service Members (SMs) money and stifle promotions. 1.) A 401k system is not good. SMs would be forced to pay for their own retirement while DoD would match 50%. Even if a SMs contributed $1000 per month out of pocket, over 20 years, they would have invested 240k to receive a matching 240k. Which is arguably 50% less than the retirement benefit we have now. I do not think DoD intends to increase our base salary to help us pay for this. 2.) This would also slow promotion rates. More SMs would not retire at 20 and stay in the ranks. This would stagnate the upper ranks --leaving less room for promotion. Want to make O-5 in 17 years? Not anymore. Now will have to wait until SMs retire at the 30 year mark to make room. You cannot get promoted ranks when military members hang around on active duty. -Contact your congressional representative or senator!
- MAJ USA, Colorado

8/24/2011 2:10:07 PM
I remember that when I joined in 1981, one of the big recruiting tools used was "Serve 20 years and you will have free medical care for the rest of your life." Well we don't have that anymore. What more do you want to take away for the thousands of Vets that served with that promise? Change is good at times but not in this case. For those that have already served, leave it the way it is. We have already lost what was promised to us. Lead by example....cut the Commander and Chief's pay and see what he thinks or has to say about it.
- Mike Kesselring, Minneapolis, MN

8/23/2011 6:09:55 AM
please replace the "for giving back our dignity" with the following statement "for not allowing them to take our dignity"
- Capt G, USA

8/22/2011 11:37:30 PM
I am very relieved that the SecDef Leon E. Paneta spoke to clarify the issue on retirement for AD-thank you, sir, for giving back our dignity! Two things that make a strong nation: excellent educational system, and strong military-the focus of this discussion. Even if tt grandfathered the members currently serving in the military--and that it would only affect the new members, It would still weakened our military, in turn- weakened our great nation. Not only our military will become unstable because of the quick turnover of enlistment/separation (w/ high probability) which is due to (cash/401k) incentive of getting out early, and of course the educ, trng, and exp usually acquired within 10 years of serving in the military--should our citizens even consider serving in the military. High turnover causes low retention, instability-certainly not cost-effective!
- Capt G, USA

8/22/2011 4:06:15 PM
I think that this business is so unfair. Surely there are other areas where cuts can be made. It is horrible to think that men and women who put there lives on the line everyday will not get the benefits they are entitled too. My husband is nearing his twenty-year mark and I can tell you that if great soldiers like him get out who will defend the country? Who is going to teach the young soldier who just enlisted? Please do not do this.
- Michelle, Ft. Sill

8/22/2011 3:56:59 PM
As ususal the government is overlooking the real problem with the budget issues. It's not retiree spending, most retiree's do not use Tri-care except for back-up until they hit actual retirement age, most go to work somewhere after the military. How about the government considers dropping full salaries for congress and senate after they've only served one term. How many of these people do we have drawing full salaries and full insurance and are less than retirement age and certainly have given less than the military to their country?
- Norma, Tennessee

8/22/2011 3:17:13 PM
As a USAF vet. I feel this would be the biggest mistake our country would ever make, especialy with a all voluntere military. When I joined 1973 The benifits was my biggest reason for joining. Why would anyone risk their life to recieve this kind of a retirement package. one you can use up and be left with nothing, plu you have to pay into vs 50%for the rest of your life. Never happen. please think it through very carefully, this country's defence is not a toy to play with........................
- w. Diaz, el paso tx.

8/22/2011 11:06:58 AM
The bigger question to ask is if someone who serves 4 years and gets out deserves "some retirement to take with them". My answer would be "No." While serving a single term is certainly admirable, pensions should be reserved for those who spend an entire career making sacrifices for their country.
- DC, MD

8/22/2011 11:03:57 AM
I understand the fact that DoD must trim the budget; however, I also believe that doing so on the backs of veterans and retirees is the wrong approach. There is a sacred trust that when one joins the military that he/she is guaranteed a specific package of benefits should he/she stay for the full 20 years. Making radical changes to the military health care system would be a breach of trust. Most retirees are on fixed incomes and cannot absorb high increases in TRICARE costs. It's the one program that retirees and veterans (and their families) rely on most as they get older. The retirees haven't had a COLA increase in 2 years now. Doesn't that count as something already given to help reduce the deficit?
- AFCM R. Wicker, USN, Retired, Syracuse, IN

8/22/2011 8:21:10 AM
This is good. Its good to see someone in Washington looking out for those who have been serving. Go Panetta!
- KAYERS, Belgium

8/20/2011 1:17:54 PM
Change the retirement pay and benefits package for Congress, The Supreme Court, the President, Vice-President and high-ranking Cabinet members first. They can afford it.
- Dennis Beck, Columbus, GA

8/19/2011 11:12:58 PM
Why has the Thrift Savings Plan not been mentioned in any of this discussion? Every servicemember has this option and is able to contribute then transfer it into a more traditional IRA when they leave the service or let it remain in place without contributing more. Therefore they do have something they can invest in for after military service. The only difference is the government does not match a servicemembers contributions.
- SFC Raymond Piper, Fort Meade

8/19/2011 11:02:14 PM
This is welcome news for all of us still serving. I figured that they would have to at least grandfather some of us. It may work to give all service members to make an irrevocable one time option to stay with old system or be put on the new 401k system. Many service members might volunteer for the new system since so many of us do not stay in for 20 and get nothing. My compliments to Mr Paneta for making a wise choice and siding with service members who have sacrificed so much for their country.
- mike.brumley, fort drum, ny

8/19/2011 4:09:34 PM
I think if you ask service members for ideas and suggestions you may get some excellent input.
- CW2 Bill Michitsch, Ft Knox

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