Military pensions: a political minefield for reformers
When Al Baker was a young infantry officer in Vietnam, his main concern was getting through the day. Three combat tours and a handful of Purple Hearts later , he has been selected for promotion to colonel. Now he's brushing up on his French and Arabic, preparing to be the top United States military adviser to the Lebanese armed forces.Skip to next paragraph
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For this he gets paid about $45,000 a year. Having just completed 20 years in the Army, he could retire at age 43 and continue receiving half that sum. He won't, but he figures this retirement benefit is ''deferred salary'' for a highly demanding and often dangerous job that has required his family - which includes six children - to move at least 15 times.
''It's very difficult to put a price on that,'' says the tall, slim West Virginian, whose family is packing up for another move.
Up on Capitol Hill, Rep. Les Aspin sees it differently. ''The retirement benefit is too generous,'' the Wisconsin Democrat says. ''A review is now long overdue.''
Early paid retirement has long been a target for military critics and reformers. But today this controversial benefit of uniformed service is the focus of special scrutiny. ''It's a new era,'' says Representative Aspin, pointing to recent changes in social security and other entitlement programs, as well as federal deficits climbing toward $200 billion.
Congress is about to begin a series of hearings on the subject; the President's Private Sector Commission on Government Cost Control has just recommended sharp cost-cutting measures in this area; and the Pentagon itself is completing its regular quadrennial review of military retirement.
Military pensions are a very large part of this country's defense budget, and they are growing rapidly. They totaled $11.9 billion in 1980, rose to $16.2 billion this year, and are projected to cost $44.7 billion by the year 2000.
The recent report by the President's cost control commission headed by businessman J.Peter Grace warned that ''retirement pay for military personnel is rapidly becoming unaffordable for the nation.''
The commission noted that the typical commissioned officer retires at age 43 and the typical enlisted man or woman at 39. Last year, 92 percent of those who retired from the service did so before they reached 60. Some 26 percent of them were still in their 30s. It is possible for the youngest retirees to receive more in pensions than they did while on active duty, not counting inflation.
There is general agreement that the rigors of military life deserve special consideration when it comes time to retire. In a New York speech last week, Defense Secretary Caspar W. Weinberger called it ''one of the strongest incentives for a military career.'' And in announcing the hearings to be held by his House Armed Services subcommittee on military personnel and compensation, Aspin carefully emphasized the ''dedicated service that will not be forgotten.''
Several officers, describing the men they led in combat, called it ''an emotional issue.'' Referring to the career sergeant, the core of any effective combat unit, one said, ''Tomorrow morning at sunrise somebody may call a war, and if the United States decides that we're going to participate, he goes.''
Others noted that certain military jobs (pilots, nuclear specialists, and engineers, for example) pay less than their civilian counterparts. And they pointed out that these positions don't include such perquisites as stock options and outside income possibilities enjoyed by others.
''I do a lot of public speaking, but I'm not allowed to accept an honorarium, '' said Colonel Baker. ''If I write anything, the Army gets to publish it.''
Still, the cost of paying a retiree as much as three-quarters of his salary for years after he leaves the service continues to mount, as do calls for reform.
The Grace Commission reported that military pension costs equal 50 percent of basic pay, compared with 5 to 6 percent for private-sector plans. Noting that a string of pay increases in recent years has brought military pay more nearly equal to civilian salaries, commission members said, ''The need for action to contain these costs is clear.''
The commission recommended that service members be given vested interest in retirement benefits after 12 years of service. But it said that retirement pay (that is, from 30 percent of final basic pay for 12 years' service to 75 percent pay for 30 years' service) should be deferred until age 65. Veterans could begin receiving retirement payments at age 55, but these would be reduced proportionate to the number of months remaining until ''full career'' age (30 years from induction). In no case should cost-of-living adjustments be made before age 55, said this group of business executives.
The Grace Commission also suggested that an ''earned-income offset'' be applied to military pensions, as it now is to social security payments. The commission estimated that $6.9 billion could be saved during the first three years of implementation.
Federal civil-service employees now must contribute to their retirement program, and Representative Aspin says this may soon apply to service personnel as well.
Until now, the possibility of early retirement has been one way to recognize that military service - especially the possibility of combat - has of necessity been a young person's job. But the Grace Commission says that ''as the instruments of war grow increasingly complex, the premium appears to have shifted toward skills rather than youth, lending an opportunity to encourage longer careers for those capable of making the most significant contributions.''
Given the political clout of veterans (14 lawmakers and 900 congressional employees draw military pensions), any reform no doubt will protect those now retired or on active duty with some kind of ''grandfather'' provision.