Pay and Retirement Report

[Spekkio]

Fresh off the press, the Military Compensation and Retirement Commission (MCRC) just released an extensive report detailing proposals to save DOD money.

Surprisingly, most of the proposals seem pretty easy to swallow and were favored by ~60% of AD servicemembers surveyed over the current system. However, I haven't crunched the numbers to determine where the 'break even' point is in 20 year stock market performance for a 5% TSP match and 40% base pay retirement vs. no TSP match and 50% base pay retirement. If adopted as submitted, it's projected to save DOD $5 bil/year, which further makes me suspicious about how this could possibly be a better deal. Haven't gotten into the report beyond the exec summary, though.

Also included in the study/proposal: making dependant and single BAH match with a pot-sweetener of expanding tricare prime to non-MTF providers (roughly 40% of AD servicemembers across all ranks and branches were dissatisfied with health care service and access), expanding on-base child care, moving the transfer date of post-9/11 GI benefits from 10 to 12 years of service, more food stamps for junior ranking servicemembers with families (not kidding), and the perceived value of on-base golf courses (also not kidding).

 

[Tycho_Brohe]

Definitely a better deal for those who separate before reaching 20 years of service. From that report, 83% of enlisted and 51% of officers serve less than 20 years and therefore receive no retirement benefits apart from what they put in their TSP's/IRA's. I'd love an auto-contributions/matching system like civilian federal employees currently get. But I too am skeptical that all this would save $5 billion, especially with a new continuation pay at 12 YOS. Probably has a lot to do with only being able to invest the pension fund in US Treasuries.

 

[Recovering LSO]

But I too am skeptical that all this would save $5 billion,

If only........there were other........ trees to shake for $5 billion.

 

[SynixMan]

It's really hard for me to believe that these changes will result in much good for the people it impacts.

Off hand, things that would honestly help servicemember's financial prospects:
-Increasing affordable child care
-DoD wide student loan repayment federal and private programs (instead of the piecemeal ones we have now)
-Outlawing for profit colleges and payday/title loans of all types

There are certainly gains to be had by reducing inefficiencies in Tricare, Commissary, and Exchanges, but doing that without fixing the broken acquisition system is like rearranging deck chairs on the Titanic. So many of these things just seem shortsighted.

 

[Spekkio]

But I too am skeptical that all this would save $5 billion, especially with a new continuation pay at 12 YOS. Probably has a lot to do with only being able to invest the pension fund in US Treasuries.

It's really hard for me to believe that these changes will result in much good for the people it impacts...There are certainly gains to be had by reducing inefficiencies in Tricare, Commissary, and Exchanges, but doing that without fixing the broken acquisition system is like rearranging deck chairs on the Titanic. So many of these things just seem shortsighted.

So I said that I was skeptical about how they will save $5billion but supposedly increase the net value of a retirement pension with a 5% TSP match. Too good to be true...

Answer: They propose drastically reducing medical benefits for AD family members.

Tricare Prime and Standard go away, replaced by 'Tricare Choice.' Service member w/ dependents gets BAHC. If you choose Tricare Choice, it sounds like BAHC is recouped and the ADFMs use MTFs. If you choose a private healthcare insurance company, the BAHC is priced to only cover 28% of annual premium costs. You read that right - a reduction from each family paying $300/person up to $1k/family with no monthly premium is now changed to the family paying 72% of insurance premiums (could be much more if their plan isn't 'average').

Pair this with the proposed 20% reduction in BAH so that single and family BAH is the same, and there is where the money is.

Naturally, favored by 60% of service members surveyed because 'why do married people get paid more that's not fair.'

Yes, $5 billion is a drop in the bucket compared to ~$570 bil DoD budget, but you can't fix the entire federal budget with just military pay and benefits. This commission was specifically tasked to analyze how to make pay and compensation more efficient, they weren't tasked with looking into acquisition or O&M waste.

You want to talk short sighted? 10 years from now the costs of SS and Medicare will drive Uncle Sam broke, but good luck changing that when something like 80%+ of voters are 60+.

 

[tk628]

$5 billion is only 16 F-35's (the initial projection cost of 16 F-35's was $640million, ~700% cost overun).... your right commission, it's the people's retirement and healthcare that broke this system...

 

[Spekkio]

$5 billion is only 16 F-35's (the initial projection cost of 16 F-35's was $640million, ~700% cost overun).... your right commission, it's the people's retirement and healthcare that broke this system...

I don't think you understand. The commission was stood up by Congress as part of the 2013 National Defense Authorization Act.

Former military flag/GOs and Congressmen don't willy-nilly embark on 2 year studies like this on their own accord.

 

[Recovering LSO]

Former military flag/GOs and Congressmen don't willy-nilly embark on 2 year studies like this on their own accord.

Sure, but they certainly have a lot of influence on what conclusions the commission comes to, and then how to (potentially) respond to any future policy changes.

 

[tk628]

I don't think you understand. The commission was stood up by Congress as part of the 2013 National Defense Authorization Act.

Former military flag/GOs and Congressmen don't willy-nilly embark on 2 year studies like this on their own accord.

Oh I understand just fine. Congress is 2/3rd's of the problem.

For the other half however, I know these guys don't just embark on 2 year studies on their own. We have to pay them millions of dollars of course! Can't expect these guys to survive on $100k+ and benefits alone!

Then they make recommendations which will impact the people now, while making sure their benefits aren't touched, because they are grandfathered in.

If this isn't the biggest self licking ice cream cone in the world I don't know what is.

... And yes I know math, I was just using congressional math.

 

[Spekkio]

Sure, but they certainly have a lot of influence on what conclusions the commission comes to, and then how to (potentially) respond to any future policy changes.

True. Thing is, at some point military compensation is going to come under fire as part of the over-arching plan to get the federal budget under control. I think that they were trying to balance saving money with retaining as many benefits for service members as possible, which is better than leaving it to Congressmen with no stake in the game to propose a solution that would probably be much worse.

They also recommended that all current service members be given the choice to be grandfathered into the current retirement plan or the revised plan with 5% match.

 

[villanelle]

So I said that I was skeptical about how they will save $5billion but supposedly increase the net value of a retirement pension with a 5% TSP match. Too good to be true...

Answer: They propose drastically reducing medical benefits for AD family members.

Tricare Prime and Standard go away, replaced by 'Tricare Choice.' Service member w/ dependents gets BAHC. If you choose Tricare Choice, it sounds like BAHC is recouped and the ADFMs use MTFs. If you choose a private healthcare insurance company, the BAHC is priced to only cover 28% of annual premium costs. You read that right - a reduction from each family paying $300/person up to $1k/family with no monthly premium is now changed to the family paying 72% of insurance premiums (could be much more if their plan isn't 'average').

Pair this with the proposed 20% reduction in BAH so that single and family BAH is the same, and there is where the money is.

Naturally, favored by 60% of service members surveyed because 'why do married people get paid more that's not fair.'

Yes, $5 billion is a drop in the bucket compared to ~$570 bil DoD budget, but you can't fix the entire federal budget with just military pay and benefits. This commission was specifically tasked to analyze how to make pay and compensation more efficient, they weren't tasked with looking into acquisition or O&M waste.

You want to talk short sighted? 10 years from now the costs of SS and Medicare will drive Uncle Sam broke, but good luck changing that when something like 80%+ of voters are 60+.

I sounds like this would function pretty much the same as Prime does now. Or am I misunderstanding? It seems like they are eliminating Standard and the alternative to using primarily MTFs would become getting a stipend to pay part of the deductible for private insurance. If that's the case, I don't have much of an issue with it. There's an essentially a free choice with military doctors, or of you want to forgo that, then you end up paying what could be a significant amount out-of-pocket. There's still a way for people to get their free medical care.

 

[Spekkio]

That sounds like what it is in a nutshell (it doesn't go into much detail about what Tricare Choice would/would not cover).

Here's my issue with it: The report goes into detail the many complaints that military family members have with MTFs: the referral process, long wait times, etc. Not to mention you're usually seeing a relatively inexperienced physician who has slurped the 'we need to save on frivolous referrals' kool aid. Then they respond with "well, we'll just give them the choice to use a private health insurance company! That's totally better! Look at this mock LES where the servicemember gets to save $50 of tax-free money to use toward copays!"

Until you scroll down and they estimate the average annual premium for an AD family of 4 is around $9k a year and BAHC will cover around $3k of it, not including copays.

So really, it doesn't fix the problems that it highlights. It's essentially saying "well, we're getting rid of Tricare Standard and you're just goin to have to deal with Prime's asinine policies or go pay for private healthcare."

Here's an example: My wife had to go see her PCM (who is actually a private physician because the base here doesn't have enough physicians to handle dependents) to get an eye test so that she can go see the optometrist, which is both wasteful and extremely inconvenient when every appointment leads to the follow-on question "who is going to watch the children while I wait around in a doctor's office?" Same thing with gynocology appointments. The PCM can't treat any of that stuff, why does he have to be an unconditional gatekeeper?

It would have been nice if they focused their recommendations on some of that stuff instead of a complicated scheme of giving a BAHC and then recouping it for MTF use.

I have more of an issue with the elimination of dependent BAH, though... Mostly because I know that as a single servicemember I banked a substantial amount of tax-free money as it was, and as a married w/ children servicemember I am already barely able to find a place within BAH to rent, let alone if it were reduced 20% to match single BAH.

 

[Randy Daytona]

If anybody wants to look at some of the data, here are charts from CFR (Council on Foreign Relations).
http://blogs.cfr.org/davidson/2015/...-understand-the-military-compensation-debate/