Report: Budget Plan Could Cost Service Members $124,000 in Retirement Pay

Sens. Wicker, Graham, and Ayotte oppose cuts to military personnel

Military retirees face loses in budget deal
December 12, 2013

Military retirees could face as much as $124,000 in lost retirement income if the bipartisan budget agreement is enacted, according to the Military Officers Association of America (MOAA).

The Washington Free Beacon reported that under the budget agreement crafted by House Budget Committee Chairman Paul Ryan (R., Wisc.) and Senate Budget Committee Chairman Patty Murray (D., Wash.), military retirees younger than 62 will receive 1 percentage point less in their annual cost-of-living adjustment (COLA).

While new federal employees who are hired after Jan. 1, 2014 will be required to pay 1.3 percent more of their pay into their pension plans, federal retirees will continue to receive their generous pension benefits and current employees will not be required to pay more.

Current civilian government workers will be grandfathered in at their current contribution rate of 0.8 percent.

According to the MOAA, the nation's largest association of military officers, the proposal would have a significant impact on military retirees, including many who retire in their 40s after two decades of service.

A loss of one percentage point in their COLA translates into thousands of dollars in lost retirement income.

For instance, a 42-year-old who retires as an enlisted E-7 could lose a minimum of $72,000. E-7 refers to the ranks of Sergeant First Class, Chief Petty Officer (CPO), Master Sergeant, and Gunnery Sergeant.

A 42-year old Lieutenant Colonel could lose a minimum of $109,000 over a 20-year period.

If an E-7 retires at 40, they would lose $83,000. Commissioned officers could lose much more. Lieutenant colonels and commanders (an O-5 rank) who retire at 40 would lose $124,000.

Opposition to the deal grew when it became apparent military retirees would see their retirement pay take a hit.

"I do not support paying for increased federal spending on the backs of our retired and active duty troops," Sen. Roger Wicker (R., Miss.) said in a statement Thursday. "Congress should not change the rules in the middle of the game for those who have chosen to serve our nation in the military."

"We can and should do a deal without cutting the benefits of our men and women who have volunteered for a military career," he said. "The plan should be rejected."

Sen. Lindsey Graham (R., S.C.), a member of the Senate Armed Services Committee, called the deal "unacceptable."

"After careful review of the agreement, I believe it will do disproportionate harm to our military retirees," Graham said in a statement. "Our men and women in uniform have served admirably during some of our nation's most troubling times. They deserve more from us in their retirement than this agreement provides."

On the Senate floor Thursday, Sen. James Inhofe (R., Okla.), the ranking Republican on the Armed Services Committee, spoke out against the changes to military retirement pay.

"This penalizes current and future military members who have served our nation for over 20 years," Inhofe said.

"Keep in mind, people go into the military quite young sometimes knowing that the time they would serve would be for 20 years, many of them longer," he said. "That's kind of a given. And they do this predicated on the assumption that retirement benefits and all these things are going to be there."

Though he is still undecided on whether to vote for the budget plan, Inhofe said the military retiree provision would have to be removed before he could vote for it.

"I know it's not an easy job," he said, of crafting a budget proposal. "I know that we had a Democrat and Republican working very hard on it, but that's one thing […] I believe that can be changed."

Sen. Kelly Ayotte (R., N.H.) has also come out against the deal late Thursday.

"I cannot support a budget agreement that fails to deal with the biggest drivers of our debt, but instead pays for more federal spending on the backs of our active duty and military retirees – those who have put their lives on the line to defend us," Ayotte said in a statement.

"My hope is that both parties can work together to replace these unfair cuts that impact our men and women in uniform with more responsible savings, such as the billions that the Government Accountability Office has identified in waste, duplication and fraud across the federal government."