The Military Retirement System: A Proposal for Change

• Author: Wener Vieux
• Position: Judge Advocate, United States Army
• Pages: 1-114

MILITARY LAW REVIEW

Volume 218 Winter 2013

THE MILITARY RETIREMENT SYSTEM: A PROPOSAL FOR

CHANGE

MAJOR WENER VIEUX*

You can always count on Americans to do the right

thing—after they’ve tried everything else.1

The credit belongs to the man who is actually in the

arena, whose face is marred by dust and sweat and

blood; who strives valiantly; who errs, who comes short

again and again, because there is no effort without error

and shortcoming; but who does actually strive to do the

deeds;. . . .2

I. Introduction

War. From the rolling fields of Antietam, the trenches of the Marne,

the volcanic sands of Mount Suribachi, the jungles of the Ho Chi Minh

* Judge Advocate, United States Army. Presently assigned as Command Judge

Advocate, 513th Military Intelligence Brigade, Fort Gordon, Georgia. L.L.M., 2013, The

Judge Advocate General’s School, U.S. Army, Charlottesville, Virginia; J.D., 2004,

University of Arizona; B.A., 1999, University of Arizona. Previous assignments include

Knowledge Management Officer, U.S. Army Claims Service, Fort Meade, Maryland,

2011–2012; Chief, Criminal Law, Aberdeen Proving Ground, Maryland, 2008–2011;

Senior Defense Counsel, Camp Victory, Iraq 2007–2008; (Defense Counsel, 2006–2007;

Tax Center Officer-in-Charge, 2006; Legal Assistance Attorney, 2005) Fort Bragg, North

Carolina; Davis-Monthan Air Force Base, Tucson, Arizona, United States Air Force

Enlisted Member 1992–2000. Member of the state bar of Arizona. This article was

submitted in May 2013 in partial completion of the Master of Laws requirements of the

61st Judge Advocate Officer Graduate Course.

1 WILLIAM B. WHITMAN, THE QUOTABLE POLITICIAN 98 (2003) (quote by Sir Winston

Leonard Spencer Churchill (1874–1965)).

2 President Theodore Roosevelt, Citizenship in a Republic, Speech delivered at the

Sorbonne, Paris, France (Apr. 23, 1910), available at http://design.caltech.edu/erik/

Misc/Citizenship_in_a_Republic.pdf.

2 MILITARY LAW REVIEW [Vol. 218

Trail, and in the mountains of Helmand Province, servicemembers have

fought for the ideals of liberty and democracy. These servicemembers

stood and faced the dangers of war. With sweat oozing down their faces,

hands numb from clutching their muskets, carbines, and M16s, their

bodies and minds near or at the point of exhaustion, they have faced this

country’s enemies. They faced their fears because they trusted in their

government to take care of them after it was all over. But today, that trust

is in jeopardy.

The economic recession that started in late 2008, the slow recovery

that began in late 2009, persistent high unemployment,3 the growing

national debt, the fiscal cliff, and the systematic problems with two key

entitlement benefits—social security and Medicare—have made reducing

government spending a key issue.4 In May 2010, Secretary of Defense

Robert M. Gates, citing the “current and projected fiscal climate” and its

impact on the Department of Defense (DoD) effort to modernize military

capabilities, tasked the Defense Business Board (the Board) with

providing recommendations on options that would “materially reduce

overhead and increase the efficiency” of the DoD’s business operations.5

The military retirement system was one of several issues that the Board

identified as an opportunity for budget savings.

The cost of maintaining the retirement system is more than $100

billion a year and has risen steadily over the past ten years.6 The Board

recommended abolishing the twenty-year “cliff” vesting system, which

grants an immediate annuity to servicemembers upon retirement, and

replacing it with a 401(k)-style system similar to the Thrift Savings Plan

3 Christopher J. Goodman & Steven M. Mance, Employment Loss and the 2007–2009

Recession: an Overview, MONTHLY LAB. REV., Apr. 2011 at 3.

4 Jeanne Sahadi, National Debt: Why Entitlement Spending Must Be Reined In,

CNNMONEY, Sep. 6, 2011, http://money.cnn.com/2011/09/05/news/economy/national_

debt_spending/index.htm.

5 DEF. BUS. BD., REPORT TO THE SECRETARY OF DEFENSE: MODERNIZING THE MILITARY

RETIREMENT SYSTEM tab A (Oct. 2011) [hereinafter DEF. BUS. BD.].

6 See U.S. DEP’T OF DEF. COMPTROLLER, FISCAL YEAR 2012 MILITARY RETIREMENT

FUND AUDITED FINANCIAL REPORT, 1 (Nov. 2012) [hereinafter MILITARY RETIREMENT

FUND AUDIT]. Cost is broken down into three components: (1) normal cost payments as

part of the Department of Defense (DoD) budget and U.S. Treasury; (2) payment from

the U.S. Treasury to cover the unfunded liability; and (3) investment income from the

U.S. Treasury in the form of interest earned from bonds. Id. In Fiscal Year (FY) 2012

total cost consisted of $21.9 billion from the Defense budget and U.S. Treasury; $70.13

billion from the U.S. Treasury; and $12.5 billion from investment income, also from the

Treasury. Id. See also infra Part V.C.1 for additional information on the cost of the

retirement system and payment to retirees.

2013] MILITARY RETIREMENT SYSTEM 3

for the Uniformed Services (TSP).7 Further, the Board, while not

explicitly supporting the option of immediately transitioning active duty

servicemembers into the new plan, estimated that the government would

save more than $100 billion in Fiscal Year (FY) 2034 if troops were

transitioned into the new system.8 The Board’s recommendations caused

an uproar in the servicemembers’ retirement community9 and sparked

fear among active duty servicemembers10 and family members who

would see a retirement system that they have depended on abolished.

The military retirement system is a compact between our nation and

those who have served faithfully and tirelessly. While the system as

currently structured is costly and fails to provide retirement benefits to

the vast majority of servicemembers currently serving in the Armed

Forces, the Board’s proposal to convert the current annuity system into a

401(k)-style plan is extreme, and tramples on the compact between the

nation and servicemembers and their families.

Despite the annuity’s high cost, it is an investment that the country

must make to maintain the best military in the world11 and

servicemembers who exhibit a level of professionalism, skill, and ability

unparalleled by any other force.12 Thus, the challenge is to devise a

modernized retirement system that (1) provides retirement benefits to

more servicemembers (earlier vesting while providing the DoD tools to

7 DEF. BUS. BD., supra, note 5, at 4–5.

8 Id. n.5, at tab C, apps. D, F. Under the current plan, FY2034 cost would be $217

billion. Under the new 401(k)-style system, FY2034 cost would be $112 billion.

9 See Andrew Tilghman, Plan to Cut Retirement Outrages Service Members,

ARMYTIMES, Sep. 1, 2011, http://www.armytimes.com/money/retirement/military-

retirement-plan-troops-react-090111w/. See also James Dao & Mary Williams Walsh,

Retiree Benefits for the Military Could Face Cuts, N.Y. TIMES, Sep. 18, 2011,

http://www.nytimes.com/2011/09/19/us/retiree-benefits-for-the-military-could-face-

cuts.html?_r=0. As a side note, Mr. Dao refers to the health care and military retirement

system as a “big social welfare system.” It is disappointing for someone to belittle the

sacrifice that servicemembers and military family members make in defending this

country. After twenty or more years of service, a health care system and retirement

benefits are earned, not a result of a social welfare system.

10 See Lisa M. Novak, Military Retirement System Broken, Board Says, STARS &

STRIPES, Aug. 7, 2010, http://www.stripes.com/news/military-retirement-system-broken-

board-says-1.113754.

11 See Tyrone C. Marshall, Panetta: U.S. Military Best in World, But Threats Remain,

U.S. DEP’T OF DEF., Jan. 20, 2012, http://www.defense.gov/News/News

Article.aspx?ID=66878.

12 See Donna Miles, Obama, Panetta Praise Military Veterans’ Service, U.S. DEP’T OF

DEF., Nov. 9, 2011, http://www.defense.gov/News/NewsArticle.aspx?ID=66021.