Advisory Committee recommends changes to military pay

A committee that's spent the past year studying the military compensation system is recommending sweeping changes that, if approved, would bring military compensation more on par with private-sector compensation.

The Defense Advisory Committee on Military Compensation recently released details of its recommendations and is incorporating them in a final report expected to go to Defense Secretary Donald Rumsfeld soon.

According to retired ADM Donald Pilling, former vice chief of naval operations, the proposed package includes two major ideas. These include revamping the retirement system so service members receive more pay throughout their careers rather than at their completion, and basing pay on performance rather than longevity and other factors.

Pilling emphasized that any proposed changes to the compensation package would be grandfathered in, so currently serving members would not be affected. The only exception could be in the case that current members are offered the opportunity to voluntarily "opt in" to the new system, he said.

In terms of retirement, the committee recommends: vesting members at 10 rather than 20 years; paying graduated retirement plans ranging from 25 percent of base pay at 10 years to 100 percent of base pay at 40 years; establishing a Thrift Savings Plan with government contributions of 5 to 10 percent of base pay; providing "gate pays" at specific service milestones, as determined by the individual services; and delaying payment of the retirement annuity until age 60.

In terms of pay for performance, the committee recommends revising the pay charts so pay is based on time in grade rather than years of service; and eliminating the "with dependents" and "without dependents" provision of basic allowance for housing so all service members in the same pay grade receive the same allowance, regardless of their family situation.

The proposed system would benefit service members, giving them more upfront cash throughout their careers, Pilling said. He noted that most private-sector compensation packages give 80 percent of their cash up front, deferring just 20 percent for retirement. In contrast, the current military compensation package pays about one-half the total compensation up front and defers the rest.

Rather than offering no retirement benefit short of 20 years, the proposed system would offer a portable retirement system with reduced-level benefits after 10 years, he explained.

Revising the pay tables to reward time in grade will ensure consistent benefits for service members promoted ahead of their peers, Pilling said. And by paying equal housing allowances to all members of equal grade in equal locations, the proposed system will reward people "for their performance, not their marital status," he said.

While bringing the military pay system more on par with systems in the private sector, Pilling said the proposal maintains sight that service in the military is unique. For example, while it calls for greater cost sharing among Tricare recipients, it continues to ensure full medical care after 20 years of service, he noted.

Story by Donna Miles, American Forces Press Service, Alexandria, Va.

COPYRIGHT 2006 U.S. Navy
COPYRIGHT 2008 Gale, Cengage Learning