Last month, officials from the Defense Business Board outlined their plan for changing the way military retirees are paid, abandoning the 20-year service target in favor of a 401(k) style plan.
“Going back 40 years, this is something that has always been talked about,” said Todd Harrison, a fellow for defense studies at the Center for Strategic and Budgetary Assessments. “But it’s getting more serious attention now than it has in the past. “In the current environment, when you’re looking at major changes to entitlement spending like Social Security and Medicare, that makes it easier to talk about changing military retirement.”
Harrison said even a lesser plan that holds the retirement payouts steady would return huge dividends for the department, trimming billions in anticipated future spending. “There are few private companies that offer a pension plan as generous at the military’s retirement plan,” he said. “So, in many respects, the Defense Department is in a worse situation in this economy than someone like General Motors.”