Defend Military Pension Cuts

One of the best things Ronald Reagan did as president was to revamp federal pensions.

Reagan foresaw the problems that unaffordable public benefits would cause over time – the same problems now afflicting many cities and states – and was determined to act.

As a result, most federal workers hired after 1986 look forward to a very modest pension, one that is significantly reduced for people leaving before age 62.

But one big group was largely untouched by Reagan’s overhaul: members of the military. They are still on a plan so generous that it allows them to retire in their late 30s or early 40s and collect a pension, with cost-of-living increases, for the rest of their lives. This is accompanied by lifetime health coverage whose premium, $460 per year for a family policy, has not risen since 1995 even as costs for everyone else have skyrocketed.

In last month’s bipartisan budget deal, Congress made some wholely defensible trims in military pensions, prompting a howl of complaints from veterans groups.

They protest too much. Way too much. The military pension system is not only extremely generous, it is also counterproductive. It drains defense money from today’s troops and weapons. And while the system encourages some people to consider the military who otherwise might not, it also encourages them to leave early, taking their first-rate training to go double-dip by moving into a civilian government job. In any case, they can collect pensions – intended as old-age protection – in the prime of their working lives.

The deal, crafted by House Budget Committee Chairman Paul Ryan, R-Wis., and Senate Budget Committee Chairwoman Patty Murray, D-Wash., would not alter those basics. After 20 years of service, regardless of age, a military retiree can expect a pension equal to 50% of final pay, with an additional 2.5 percentage points for each year of service beyond 20.

The “cuts” come in the form of a reduction in cost-of-living adjustments, or COLAs, by 1 percentage point each year until age 62. At 62, the full COLA would come back, and pensions would shoot up to where they would have been had the full COLA been in effect from the start.

For example, a first sergeant retiring now at 40 with 20 years of service would collect a pension of $24,828. By the time he or she reached 61, it would have risen to $39,507, and now would rise to $32,464. The following year, it would be $40,496 under both formulations, and would receive the full COLA thereafter.

This approach would save taxpayer money and help reach budget targets. It also would discourage people from leaving early after the government has invested so much in them.

The change would also make military pensions less wildly out of line with most Americans’ experience. Private-sector pensions, to the extent that they exist at all, are routinely scaled back or frozen in ways much more dramatic than these changes.

Certainly, protecting veterans impaired by their service is a different sort of issue. But the current system rewards all equally, including the 40% of servicemembers who have never seen a combat zone.

If Congress doesn’t have the fortitude to stand by even this small tweak in military pensions, it doesn’t bode well for the far bigger, tougher budget decisions that loom ahead.