Proposed New Military Retirement Plan

 
Download Military_Retirement_Final_Presentation

This proposal of the "Defense Business Board," an advisory panel has quite a bit to recommend it.  One of the good things about it is that people who leave service voluntarily before 20 years would be vested for some sort of long term compensation.  The biggest drawback that I can see is that the individual retirement accounts would apparently be invested in commercial paper of some kind.  We are now observing the possible outcomes in falling markets.  pl

Comments

[Charles I]

Yes, its mandatory now that any further expansion of any sort of retirement benefit be diverted to private capital welfare, subject to churning, fees, the markets, rather than soundly managed as a pooled trust.

Our government just pulled the same trick, refusing to expand the Canadian Pension Plan in favour of another private profit scheme directing capital to the banks and stock market just when they need a few more years liquidity. . .

[Fred]

"individual retirement accounts" this is the same neoconomic 'solution' to solve the alleged social security shortfall three decades from now. Imagine just how much retirees would have lost in the last two years and more importantly for the proponents - how much in commissions would be earned by the various brokers and product pushers. I wonder what following S&P rated stocks would have contributed to both losses and commissions?

[confusedponderer]

"The biggest drawback that I can see is that the individual retirement accounts would apparently be invested in commercial paper of some kind. "

Didn't have time to read the paper yet, but that gave me pause.

I wonder whether that is truly a good idea, considering that the retirement money that floated into the financial sector via the 401ks by and large contributed to the massive amounts of money floating in the financial system and the resulting bubbles.

The idea behind retirement money is to make it safe. It's not meant to make you rich but to keep you funded when you retire. Retirement money is not an investment, and it should not be treated that way.

IMO the only ones who'll truly benefit from this privatisation of retirements assets will be traders and financial institutions i.e. it is likely a corporate give away and a retieree rip-off.

[john in the boro]

Bad ideas have a life of their own and are harder to kill then cockroaches. If fairness to those 83% who do not reach retirement is the issue then credit their Social Security accounts with an appropriate amount--oh wait, Wall Street wants that too.

[The Twisted Genius]

This appears to be a move to a pure 401k like TSP retirement system with no pension component. I assume the present Federal retirement system (FERS) would move the same way and drop the pension portion of the plan. This is just mirroring what has already happened in the private sector. I'll be getting two pensions eventually while my kids will never see one... ever.

The TSP does have a safe option in the G fund which earns interest and is not subject to market fluctuations to the same extent that other fund options are. You won't lose your principal in the G fund like you can in all other fund options, but you can lose more to inflation than you will gain in interest. Check out tsp.gov for details on the plans. I ran the figures on what I would get if I converted my TSP account into a pension like annuity. It wasn't very impressive. The bottom line is that a comfortable retirement income will become harder to assure.

[Jose L Campos]

There is no possibility of making any thing safe. Life is risk. Only cemeteries are safe but even there grave robbers act The wealth of every moment has to be distributed among all the citizens, some might be rewarded with more because of their outstanding contributions. But one cannot save for the future any more than one can save systoles. If you don't use your available systole there will not be another one...

[VietnamVet]

Colonel,

Don’t forget the State, County, Municipal, and Union Pension Funds that were decimated by invested in S & P Triple A rated Mortgage CDOs.

I find it incredible that there has been no one thrown in jail for the theft of these monies. Where there is money to be jacked and bonuses to be earned, the elites and their made men are pushing privatization.

[walrus]

We call such a system "superannuation". Such individual retirement accounts are provided by the private sector. Having an account is compulsory. The conduct of superannuation fund managers is heavily regulated in an attempt to stop scams.

http://en.wikipedia.org/wiki/Superannuation_in_Australia

[J]

Colonel,

Future military retirees (including those in the Military Intelligence fields )should be comforted in knowing the DBB sought the advice of the CSIS, whose one of its 'experts' is none other than one of those involved in the intentional outing of a CIA NOC, a one Richard Armitage. Also listed are a number of CSIS experts appear to be 'foreign' individuals whose objectives appear to want to benefit their foreign state over our U.S., some who are affiliated with hostile foreign intelligence agencies.

Why did the DBB also 'consult' in their 'interviews' regarding U.S. Military Retirement issues, the Defense Ministries of Canada and France? What do those two nations or anything they might say or recommend have anything to do with U.S. Military Retirement issues?

Is the DBB in reality a Trojan horse designed to undermine our nation's Military Infrastructure? My inquiring mind wants to know.

[R Whitman]

I am surprised that they did not consult with TIAA which provides retirement services to most private universities and schools, non profit organizations and some public universities in the US.

The organization itself is non-profit and has a 95 year history of success.

[Jonathan Britton]

This is insanity.

How can the federal government make promises to all the military who put their life on the line, and then simply say "sorry you sacrificed and built your life around this promise, but we are taking your pension". And then to offer this piss-poor TSP plan is insulting. Don't pee on our leg and tell us it's raining.

[Fred]

I'll have to re-read here's a few concerns:
1) Out of 12 government agencies, including 3 branches of the service (US Coast Guard isn't on this list?) were any NCO's involved?
2) There are 3 think tanks and zero veterans groups. 3) The Former DOD and Government Officials, two are CSIS or related think tanks.

Defense Ministries of Canada and France? If we are going to have national health care like either country great, otherwise who are you kidding? Of course the comment 'Retiree healthcare (Tricare) is significantly more generous than civilian programs" is the same message that Secretary of Defense Gates recently gave when he said "Health care costs are eating DOD alive".

"Military skills are transferrable to the private sector?" which ones? Who other than Blackwater needs snipers, artillerymen? How about tankers or sonar operators"?

Second, while on active duty, unlike in the civilian sector, one can't say 'no' to the OT. Just imagine, it's 5 O'clock on Friday and you're done for the week, so you go to round up your friends and go hit the beach for the week end - oh, wait, you're in the Koregal Valley? Sunni Triangle? Too bad. Not to worry, you 'make' more than the private sector. Next thing you know we'll figure out how to charge your 'rent' for that 3 person room, not to mention utilities..

Here' the big FU to volunteers.: "The plan …. Payable at age 60 or 65." Now, enlist at 18 and to collect retirement after twenty years of honorable service please wait another 21 to 26 years. As one commentator on the blog wrote not long ago he didn't need any 40 year old 'rookies' in his company, especially when he can hire a college kid for less pay and benefits.

"Modifying the retirement system would create an effective force shaping tool" : What do these people think the Military exists for, to defend the wealth of society or the society itself? A 'weapons system' is a tool and only part of the ability (to use your term) to project combat power (violence and destruction) in service of the state. Take a look at the actions in Libya. All the weapons systems ordinance delivered at great expense have failed to serve the state's interests of removing Qathafi from power. A bunch of guys worried about their military 401K plan balances because they are 59 1/2 and the market just tanked (thank you S&P!) aren't going to do it either.

I can only conclude this group does not consider the opinions of the Non-Commissioned officers or younger soldiers, sailors and marines to be of any value as none of those ranks appear to have been represented. This has a predetermined result and it appears members were selected to generate a report to meet that end. You just posted about the 'troubles' in England and the class stratification. This report has class written all over it. The MBA values society, money, and those who have it, matter; those without either, don't.

If you want effective reform start by returning to the Founding Father's principles: change the DOD back to the War Department - because we all know we fight wars to defend America and there are always questions about funding wars. There is never 'enough' money spent on 'defense', even when we are the only super power on the planet.

These Americans will be returning home in flag drapped coffins.
http://www.defense.gov/releases/release.aspx?releaseid=14728

Bill Gates and his billionaire compatriots will still have their third tax cut in place, along with the other 4. Lets reform that first.

[rjj]

Weren't credit unions established as a response and alternative to financial sector predation?

[HankP]

Col. Lang -

This is the result of a long time aim of conservatives, which is to push all risk away from government and corporations and on the the individual. They've already done it to most of the private sector, it was just a matter of time before they finally got around to the military.

[JTCornpone]

Sounds like a shift from a "Defined Benefits" to a "Defined Contribution" plan. Many Social Security privatizationistas would like to be able to direct their SS accounts this way but basically it transfers the risk from the retirement fund to the future retiree.

A sophisticated investor with 20 years experience might be able to make a decent retirement in such a plan if they had it to do over again but how about an 18 year old recruit or new hire just out of high school? There will be fins circling in the water.

JT

[William R. Cumming]

rjj! Unfortunately the Credit Unions are just another customer of the banks with all that implies.
Apparently the decline yesterday in the market was over fear that US banks would have to disclose their lending to EU and British banks, especially the PIIGS (Portugal, Ireland, Italy, Greece, and Spain)!

Currently there is NO requirement for US banks to disclose foreign loans to other banks.

And question? Do we know how many military retired then take civil service jobs? There used to be a setoff of military pensions against a civil service salary but I understand no setoff now.Not sure if this is accurate. I thought after 5 years of civilian service a retired military person could choose to have a civil service pension only but usally was more generous than to have the military pension and the much lower civil service pension due to the short period of time as a civilian.

[RM]

Seems like all these analyses of military pay focus on the 20 year retirement. They conveniently forget that you're forced out at 30 years unlike other gov't workers. Being forced to start a new career at age 50+ isn't something you can fix with a "Project Transition".

[Stephanie]

"How can the federal government make promises to all the military who put their life on the line, and then simply say "sorry you sacrificed and built your life around this promise, but we are taking your pension". And then to offer this piss-poor TSP plan is insulting. Don't pee on our leg and tell us it's raining."

It resembles the deal received by many private sector workers, if they have any deal at all. Those workers will have little if any sympathy for people, even military people, who lose traditional pension benefits, just as union workers are resented for having strong retirement plans and benefits through collective bargaining. That lack of sympathy is what the corporate interests and their political representatives, who drive this sort of change, are banking on, as it were. Divide and rule.

[scott s.]

I'm surprised the report didn't review the previous attempt to revise military retirement, which I think was concluded to be a failure. Also, when they created FERS, they gave the option for CSRS to transfer into it, but I don't think there were many takers, probably for good reason. Anecdotally, I see people in TSP become risk-adverse and put everything into G fund. I think they will in for a rude awakening when the time comes to start drawing from TSP.

[Patrick Lang]

Stephanie

it is dangerous to f---k with the legions. pl

[Mj]

And the poor dumb schmucks who only put their "lives on the line" for two or three years? fresh outa bubble gum

[J]

Colonel, WRC, mbrenner,

Could those who are hard at working trying to destroy our nation's social safety nets and infrastructures, be the progeny of those who attempted an unsuccessful Nazi coup against FDR? There are some that I have talked with, who feel convinced that is what is happening, and that it is these progeny of the coup plotters that are the unseen ones behind the curtains pulling the strings and funding. I'm beginning to wonder if in fact they could very well be right regarding it.

[William R. Cumming]

The problem PL is that in the USA the legions have always been subject to trickery and dissembling if not outright lies by those who take advantage of their patriotism and willingness to "pay the last full measure"!

Perhaps it was always so but yes I fully agree very very dangerous.

[linda]

man, just imagine the fees those 'pension managers' could siphon off... the big boyz are almost there in dismantling the social safety net and redirecting all those monies to themselves. i wish someone would ask pete peterson how much is enough?

[Fred]

Linda

Bingo! It's the new gold mine. Equally rediculous is the 12b fee for 'marketing' when everthing is on-line. You should take a look at the recent Supreme Court decision regarding the Janus fund, another outrage.

http://www.reuters.com/article/2011/06/13/us-janus-lawsuit-court-idUSTRE75C3CC20110613