Military pension reform likely to be a thorny issue this election year
Washington — Given the large number of veterans in Congress, the awesome clout of veteran's organizations, and the fact that this is an election year, a cynic could be forgiven for doubting that changes will be made any time soon to the very costly military retirement system.
The issue has been subjected to numerous studies now gathering dust. And in the last 15 years, the dozen or so major proposals for change have gotten nowhere.
But a confluence of events and changing attitudes indicates that there may be reform on the horizon for a program that costs taxpayers $16 billion a year, would grow rapidly without change (to nearly $24 billion by the end of the decade), and provides benefits much more generous than private pension systems:
* The unfunded liability of the military retirement system now totals well over half a trillion dollars, according to the National Taxpayers Union. It is a figure that staggers even those who have gotten used to saying ''$200 billion deficit'' without stammering.
* Relatively fewer career military personnel even train for combat jobs anymore, so ''youthful vigor'' is not as much a requirement as it once was. And there is growing concern about letting go (some would say forcing out) highly skilled support and technical servicemen and women just when they are reaching their mid-career productivity peaks.
* The President's Private Sector Survey on Cost Control (the commission headed by businessman J. Peter Grace) recently concluded that payment of full military retirement benefits after 20 years' service was far too liberal. It recommended savings that could total nearly $7 billion over three years.
* The Pentagon is finishing its quadrennial review of military compensation, which is likely to include at least modest suggestions for retirement savings.
Even though Congress has tended to duck the broader issue, it has made some adjustments in recent years that have nibbled away at the cost of the program. For example, retirement pay (50 percent of base pay after 20 years) for those who enlisted after 1980 will be based on the average of the highest three years of basic pay instead of the last year.
The armed services and their legion of retirees are girded up for a fight on the issue. They argue that cost savings could prove illusory, especially with the services trying to attract the best-qualified youth as the younger population declines in coming years.
''Reduction in retirement pay will drive up near-term costs through higher pay and bonuses for the active force in order to maintain (today's) force levels ,'' retired Navy Capt. Thomas Hale warned in a recent address to the Association of the US Army. ''Even with such offsets, it would be extremely difficult to predict what quality of force such a mercenary approach would attract.''
But critics point out that military pay has increased considerably over the past decade and now is generally comparable with private scales. The Grace Commission asked whether the nation could afford this ''and at the same time provide for a pension benefit that costs more than six times as much as the better private sector plans.'' The commission noted that this high cost is due primarily to early retirement (average officer 43 years old, average enlisted personnel 39), followed by many years of collecting benefits.
It recommended either delaying payment of benefits until 30 years from enlistment, or applying an ''earned income offset'' to military retirement pay until the recipient reaches age 62. This would affect another area critics say needs reform: the 200,000 or so ''double dippers,'' who collect military pensions while working full-time in other government jobs.
Other possibilities said to be under consideration by the Pentagon's quadrennial compensation review: reducing retirement benefits after 20 years' service from 50 percent to 35 percent of base pay, and cutting the regular cost-of-living raises for retirees to something less than the full rate of inflation.
In any case, the issue should prove increasingly contentious when Congress returns to continue its investigations.