New retirement options for servicemembers could save cash for military - REDUX 2.0?

[hobbitcid]

Looks like Redux 2.0 to me...

From the article:

"A cost-saving option might be to offer active-duty troops full retirement benefits only after 30 years’ service with mandatory retirement at 40 years."

Right and if the same high year tenure rules apply. A lot less officers and NCOs will be making it to full retirement...

Here is how I think this will go... the DOD insitute the change and it will remain in effect for about 8-10 years - then whole "classes"or year groups of officers and NCOs will depart taking their valuable experience wit...h them. As a result, these classes will become so small that once again, the 20 yewar retirement will be reinstated, continuation will be automatically offered to officers and NCOs who are at high year tenure and contractors will take over the positions be left unfilled by the rapidly departing mid-level work force.

History repeating itself once again - do thes guys actually think the military is Microsoft or IBM?

http://www.stripes.com/news/new-retirement-options-for-servicemembers-could-save-cash-for-military-1.234889

[pcola]

Right and if the same high year tenure rules apply. A lot less officers and NCOs will be making it to willing to put up with the AF bullshit until full retirement...

the DOD insitute the change and it will remain in effect for about 8-10 years - then whole "classes"or year groups of officers and NCOs will depart taking their valuable experience wit...h them. As a result, these classes will become so small that once again, the 20 yewar retirement will be reinstated, continuation will be automatically offered to officers and NCOs who are at high year tenure and contractors will take over the positions be left unfilled by the rapidly departing mid-level work force.

FIFY

The retirement argument is a moot point. The parts of your post that I left are already in progress, regardless of any changes to the retirement benefits.

If they change the retirement (and they should) it won't effect any currently serving member (just like redux 1.0.)

[Tulsa]

Looks like Redux 2.0 to me...

From the article:

"A cost-saving option might be to offer active-duty troops full retirement benefits only after 30 years’ service with mandatory retirement at 40 years."

Right and if the same high year tenure rules apply. A lot less officers and NCOs will be making it to full retirement...

Here is how I think this will go... the DOD insitute the change and it will remain in effect for about 8-10 years - then whole "classes"or year groups of officers and NCOs will depart taking their valuable experience wit...h them. As a result, these classes will become so small that once again, the 20 yewar retirement will be reinstated, continuation will be automatically offered to officers and NCOs who are at high year tenure and contractors will take over the positions be left unfilled by the rapidly departing mid-level work force.

History repeating itself once again - do thes guys actually think the military is Microsoft or IBM?

http://www.stripes.c...litary-1.234889

Dude,

Do you even read before you post or do you scream like chicken little when the sky is falling? Holy shit, breath, think, and then post.

[hobbitcid]

Wow - quite a reaction...OK a couple of notes:

First, yes I read the article; in fact I read several articles very much like it back in 84/85. Those articles also said military retirement was too expensive and too generous and a small reduction in the benefit will not significantly affect the force. They were wrong...

Second - I never inferred the changes would affect those on AD or those who have already retired. I was on AD before ReduX kicked off and like pcola above, most of us didn't really care. There were a few old heads who did say that around the 5-10 year mark, more officers and NCOs would depart based on the reduced benefit. And damned if they were not right... The year groups between 86-92 were way short of bodies causing the inevitable bathtub. This isn't about now, its about the future...

Third - the cost of retirement is directly associated to the requirement to pay out after 20 years of service. In the past options being discussed for 10 and 20 year retirement benefits were discussed in terms of deferred benefits.

Example 1 - a captain stays in for 10 years, then decides to leave and go fly for the airlines, work for Goldman Sachs or become a teacher - whatever it does not matter. He can leave with a deferred option for 25% of his base pay starting at age 60 (conjectural). Unless you are on the fast track to O-7 and greatness that is a great deal! A guaranteed pension and medical care are set! Unless you are deadwood, cannot transfer your skills or have a financial, familial or health based reason to stay you would be stupid not to take the deal and run. So most of the best and brightest will bolt for the door at 10 years, I would not expect anything less. And oh by the way, because the pension is deferred, the US DOD will have to pay it when Cap X gets to age 60. So about 30 years down the line there will be an avalanche of retirees hitting the program.

Example 2 - we have to assume that since the DOD is trying to save money, they'll defer the 20 year retirement as well. So let’s say the straw man is a Major required to retire by high year tenure with continuation at 20 years. He can't get his 50% until age 60 which is probably 15-18 years away. But... at age 42-45 he probably has 1-3 kids in high school and/or college, has lived in his last house for less than four years (no equity) and his spouse has not been able to start or maintain a career because they move every 3-4 years. Maj Y has to get out and support his family with what he's hopefully saved because he and his wife have to start over. Given the 10 year deferment vs the 20 year deferment, I'd say Maj Y is pretty stupid. Few people would willingly put themselves in such a tenuous position.

So basically the 10 year deferred plan coupled with current up-or out policies for tenure will actually reduce the number of quality personnel at the field grade officer and mid-senior grade NCO level - and will increase the number and cost of retirees in the out years. For some these options will be great, for others not. But I personally believe the forces will suffer in the short term (10 years) and in the long term (30 years +).

Of course I’m only able to look at this from the prism of the last 30 years - I've seen it before. It may work this time, but given the track record of most “business plans” when applied to the forces, I would not take any bets.

[ThreeHoler]

FIFY

The retirement argument is a moot point. The parts of your post that I left are already in progress, regardless of any changes to the retirement benefits.

If they change the retirement (and they should) it won't effect any currently serving member (just like redux 1.0.)

You do realize that REDUX affected every service member initially, right? It was only after the generals complained to Congress (without any valid data) that it would adversely affect morale and retention.

I still see morons take the CSB/REDUX every year because they think they can do better with PV than FV. Makes me sad.

[joe1234]

Example 2 - we have to assume that since the DOD is trying to save money, they'll defer the 20 year retirement as well. So let’s say the straw man is a Major required to retire by high year tenure with continuation at 20 years. He can't get his 50% until age 60 which is probably 15-18 years away. But... at age 42-45 he probably has 1-3 kids in high school and/or college, has lived in his last house for less than four years (no equity) and his spouse has not been able to start or maintain a career because they move every 3-4 years. Maj Y has to get out and support his family with what he's hopefully saved because he and his wife have to start over. Given the 10 year deferment vs the 20 year deferment, I'd say Maj Y is pretty stupid. Few people would willingly put themselves in such a tenuous position.

I agree that the Major is pretty stupid, not because he did 20 years, but because the idiot bought a house within 4 years of knowing he would have to get out. Anyway, there is zero incentive for that guy to stay active duty once his initial commitment is over. Why would be keep moving around from place to place when he's just going to get the equivalent of a guard retirement? Dude could have planted roots and started taking steps toward a second career 10 years ago whether he stayed in uniform part time or not.

If you take the immediate pension off the table, then it has to be back filled with something amazing to keep people on AD. 10% 401k matching, awesome quality of life (never happen), huge bonuses, or SOMETHING to fill the gap. I think the people who pitch this stuff simply don't understand how much people fucking hate active duty.

[herkbum]

You do realize that REDUX affected every service member initially, right? It was only after the generals complained to Congress (without any valid data) that it would adversely affect morale and retention. I still see morons take the CSB/REDUX every year because they think they can do better with PV than FV. Makes me sad.

I just declined mine and it was a no-brainer.

[Karl Hungus]

Careful folks- Hoss will be around any minute to accuse you all of "fear mongering".

I think the people who pitch this stuff simply don't understand how much people fucking hate active duty.

A few years ago I would have laughed at this statement. Now...

[hobbitcid]

I agree that the Major is pretty stupid, not because he did 20 years, but because the idiot bought a house within 4 years of knowing he would have to get out. Anyway, there is zero incentive for that guy to stay active duty once his initial commitment is over. Why would be keep moving around from place to place when he's just going to get the equivalent of a guard retirement? Dude could have planted roots and started taking steps toward a second career 10 years ago whether he stayed in uniform part time or not..

My point exactly - Major Y would have either gotten out with his deferred retirement at 10 years or joined the guard or reserves so he could stay in one place, create a second career, build equity in his home and allow his spouse to develop a career. As to being stupid enough to buy a house four years prior to bailing, in some cases he has no choice - less base housing, poor and overly priced rentals options may leave Major Y with no choice. The 20 year retirement (actually retainer) is supposed to provide the cushion he needs to cover his mortgage, utilities and car payments while he gets re-booted into a new life.

[brickhistory]

Dude,

Do you even read before you post or do you scream like chicken little when the sky is falling? Holy shit, breath, think, and then post.

Foul. This did happen previously during hobbit's and my time which doesn't precede you all that much. Wonderboys in an Administration hit on this idea, thinking it and they are the sh1t for thinking it up. Then it blows up in their, well actually the nation's face when dudes punch because the ring at the end isn't brass, but peanut butter. Not to mention that the promotion rate, and, most likely, PCS rate will slow down dramatically. Look at the RAF for examples of such or Guard/Reserve units. Wanna be a captain for 12 years? A major for 10 or more? That is the inevitable result since the officer caps will remain in place.

[Longhorn15]

General curiosity, how would you gents feel about getting rid of the retirement in favor of 2 to 1 TSP/401K matching, coupled with bonuses to accept ADSCs?

The healthcare benefit is losing it's luster with Obamacare looking like it's going to drive us to a single payer system.

The unintended consequence of this is the AF would actually have to take care of it's people, not just pay lip service. If you have to pay guys 100K to take an assignment to Cannon, or stay in for a 365, perhaps big blue would realize these are stupid decisions that destroy QoL.

It would have the fringe benefit of getting rid of many of the mid-level Officers and NCOs who are just wasting everyone's time until they can retire at 20.

I would feel more comfortable leaving the AF with 300-400K in my pocket after 15 yrs than the promises of politicians that they're going to take care of me after I serve 20, especially when you factor in healthcare changes that are happening.

[guineapigfury]

Foul. This did happen previously during hobbit's and my time which doesn't precede you all that much. Wonderboys in an Administration hit on this idea, thinking it and they are the sh1t for thinking it up. Then it blows up in their, well actually the nation's face when dudes punch because the ring at the end isn't brass, but peanut butter. Not to mention that the promotion rate, and, most likely, PCS rate will slow down dramatically. Look at the RAF for examples of such or Guard/Reserve units. Wanna be a captain for 12 years? A major for 10 or more? That is the inevitable result since the officer caps will remain in place.

I currently work with a few of these, and the difference there is that the standard is retiring as a Captain and they will let their pilots focus solely on flying if that's what they want.

Edited August 15, 2013 by guineapigfury

[brickhistory]

Yep.

Not saying it's wrong, just drastically different than what we do at present and dudes should think about it carefully.

As well as pointing out that hobbit's OP was valid, IMO.

[Tonka]

Obama gives pay/retirement guidance to the committee: (Recommendation due to the President by May of next year)

http://www.military....C=airforce-a.nl

Chief among these, according to the three-page document, is that the commission does nothing to alter the current retirement system for those already serving, retired or in the process of retiring.

“While we have successfully transitioned from a conscripted force to an all-volunteer force, sustaining this force requires responsive and prudent management, especially given the fiscal challenges we face as a nation,” he wrote.

The article goes on to say: Hey guess what, when the economy gets better we can no longer expect people to join/stay in without significant incentives... Hey maybe somebody finally figured it out!

[Air V]

Question about contribution limits under the new blended retirement system. The FAQs aren't exactly clear.

Say I normally hit the contribution limit of $18,000 into TSP.  Do the new direct contributions and government matching fall under that same limit or are those above and beyond my personal contributions?

i.e Are my contributions along with the government's contributions capped at 18k a year?

Thanks in advance.

[nsplayr]

For other 401(k) type plans, employer contributions are not part of the cap, i.e. 18k is a cap on what YOU can contribute, not on the total amount of contributions. 

TSP works this way now for Fed civilians who receive matching funds and AFAIK it will continue working this way under the new mil blended retirement system. 

[11F]

Straight from the IRS website:
total employee and employer contributions (including forfeitures) - the lesser of 100% of an employee’s compensation or $54,000 for 2017 ($53,000 for 2015 and 2016 not including "catch-up" elective deferrals of $6,000 in 2015 - 2017 for employees age 50 or older) (IRC section 415©)