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Defense Secretary Ash Carter waded into the debate about military retirement reform for the first time Monday, saying he supports the idea of overhauling the current system to provide some benefits for troops who serve less than 20 years.
Speaking to soldiers at the Army's Fort Drum in upstate New York, Carter said offering a benefit to all troops by making cash contributions to individual investment accounts will be a retention tool in the future and help the military keep the best service members.
"I'm looking very hard right now at blended retirement plans that would be similar to the 401(k) mechanism that is widespread in civil society. Because 80 percent of our troops leave service before 20 years are up. ... And in the current system, if they leave before 20 years, they leave with nothing," Carter said.
"So we want to look at that and see if we can create a choice that opens up opportunity and is — allows us to be more similar to other [civilian] institutions and therefore competitive with them in getting people to join us and stick with us," he said.
MILITARYTIMES
Obama signals support for changes to military pay and benefits
The idea of a blended retirement system — one that includes both government contributions to investment accounts along with the promise of a traditional pension — is gaining political support and was included in a detailed proposal in January from the Military Compensation and Retirement Modernization Commission.
The plan would create 401(k)-style investment accounts for all troops and the government would offer up to 6 percent of basic pay for troops who contribute their own out-of-pocket money. Troops would own that investment account regardless of when they leave the military.
The commission's proposal would also give troops who reach 12 years of service a lump-sum retention bonus in exchange for a new four-year service commitment. The amount would likely vary by service and career field.
Carter did not mention another central — and more controversial — component of the proposal, which would shrink the size of the current pension by 20 percent.
Congress would have to approve any changes to the current laws defining military pay and benefits. Today's troops would be grandfathered under the current system and only future recruits would be required to accept the new system.
The views of the Pentagon's senior leaders will likely be an important political factor for lawmakers on Capitol Hill as they wrestle with the controversial issue of military compensation.
Carter's comments came the same day that the White House signaled support for the compensation commission's proposals, which would also include sweeping changes to the military health care system.
"I believe the recommendations are an important step forward in protecting the long-term viability of the all-volunteer force, improving quality-of-life for service members and their families, and ensuring the fiscal sustainability of the military compensation and retirement systems," President Obama wrote in a letter to the compensation commission.
But Obama stopped short of endorsing the 15 specific recommendations that the commission sent to Capitol Hill in January.
The White House backs the "underlying objectives" of the recommendations, but will continue to review the details and "to adopt or refine the specific proposals in as many instances as possible," according to the letter.
Obama said the White House would provide a more detailed response to the proposed changes by April 30.