This column explains why the current military retirement system is an incredibly good deal for the U.S. taxpayer and why the Obama Administration's proposal to change it would defeat the currently successful re-enlistment and retention rates for our volunteer armed forces. (Fair disclosure: The author served 20 years on active duty and is retired at half pay.)
Shortly after entering active duty, yours truly asked a seasoned personnel officer: "Why is my base pay only $222.22 per month when so many of my college classmates who went into civilian life are making twice or three times that?" What follows is a reconstruction of that conversation:
"Lieutenant, your low pay is because the military system is 'deferred compensation,' meaning you do not have to pay anything upfront toward retirement which will be 'vested' if you complete 20 years of active-duty service. So, we are 'deferring' your pay for you to draw later as retirement. If you make it through 20 years, you get half-pay for life and almost-free medical care. But if you do not complete 20 years of service, you don't get any retirement. Nada, zip, zero."
"Well, what could I expect to happen during the next 20 years?"
"Lieutenant, as an infantry officer, you can expect to live abroad for about 10 years, much of it in disease-ridden, Third World countries you would never ever want to visit on vacation. You will be moved 15 to 20 times. You can expect your household goods to be lost at least once. Off and on, you can expect to be separated from wife and family for about six years. You can expect to be wounded at least once. Or, killed. But that only happens once.
"After you reach about 10 years of service and you are at a point when you are most valuable to the military, you can expect the civilian bean-counters in the Pentagon to try to find ways of getting rid of you short of the 20 years you need to draw retirement. Do not give them any reasons to do that. If you get hurt, shake it off. Don't report it. The bean counters don't want retirees with medical problems. Also, the military has an "up or out" policy. Go to graduate school at night and on weekends to stay competitive with your peers. Do not give them an excuse to throw you throw out short of 20 years."
"OK, of all the second lieutenants who came on active duty this year, what percent of us will make to 20 years?"
"Out of your year-group, about 6 percent of you will make it, meaning the USA will never have to pay a dime in retirement to 94 percent of you. It is a cruel deal for those who don't make 20 years; however, it is a sweetheart deal for the U.S. taxpayer. For the troops who do make 20 years, they will have played 'you-bet-the-best-years-of-your-life,' and won."
Returning to 2011: Today, due mainly to better battle-field care, 17-percent of the force is making it to the 20-year retirement mark. Even so, 83-percent who have served will never see a dime of their pay that was "deferred" for their retirement.
To make the system more "fair," the Obama administration proposes to "vest" a reduced amount of retired pay at 10 years of service. Guess what many of those with 10 years of service and facing almost certain assignment or reassignment to Afghanistan or Iraq will do? Answer: Take a reduced retirement and leave military service.
In 1986, Congress reduced military retirement by 20-percent, undermining retention and readiness so badly that by 1990 Congress had to reverse itself. Predictably, the proposed Obama scheme will devastate retention rates while, at the same time, destroying a system that is more than "fair" to the taxpayers.
Nationally syndicated columnist, William Hamilton, was educated at the University of Oklahoma, the George Washington University, the U.S Naval War College, the University of Nebraska, and Harvard University.