Report: Pentagon proposes retirement pay overhaul

The Pentagon is floating a new detailed proposal to overhaul the military’s pension system, Military Times reports.

The new proposal would preserve the system of providing retirement pay for those who serve 20 years or more, but it would provide smaller monthly checks to retirees.

{mosads}To compensate, the Pentagon is proposing new payments through a 401(k)-style benefit for troops who serve at least six years, a retention bonus at 12 years and a large lump-sum payment that’s provided upon retirement for those serving at least 20 years, according to Military Times.

The plan would likely lower the total lifetime amount of retirement pay by roughly 10 percent, although the figure differs based on various options for implementing the changes.

The 44-page retirement report was presented on Thursday. It argues that many troops would prefer the trade-off of lower lifetime benefits if they receive more money up front.

“When compensation is paid out sooner, it has more value to the typical member who is assessing whether to continue in the military,” the report says.

The proposal will fuel the heated debate over military compensation reform, which Pentagon officials say is necessary but faces resistance from veterans and service groups.

A commission is currently studying changes to the retirement system and is set to issue its finding by February 2015.

The Pentagon included several changes to military compensation and benefits in its 2015 budget request released this week — none as sweeping as the new report — which were criticized by veterans advocates and lawmakers.

The 2015 budget is teeing up a fight on Capitol Hill that highlights the difficulty the military will have in Congress to change its compensation policies.