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Pentagon calls for relaxed pension cut
« on: January 28, 2014, 11:20:38 AM »

January 28, 2014, 09:50 am
Pentagon calls for relaxed pension cut

By Jeremy Herb

Pentagon officials on Tuesday called for the $6 billion cut to military pensions to be changed so that current service members and veterans are not affected.

Acting Deputy Defense Secretary Christine Fox said at a Senate hearing that the Pentagon would “strongly recommend” grandfathering the cuts included in last month’s two-year budget deal.

This would ensure that current retirees, and people now in the military who will retire and see their pensions reduced, would not be affected by the cuts. Only future members of the military would see their pensions reduced.

This is the first time the Pentagon has called for a change to the pension cut, and it is likely to spur momentum to change the controversial provision. More than a third of lawmakers have endorsed repealing the $6 billion cut altogether, and veterans groups have lobbied fiercely to reverse the cut.

The cut was included along with a separate reduction to the pensions of civilian workers. That cut only affected civilian workers hired after Jan. 1, 2014.

The budget deal reduces the annual cost-of-living adjustment (COLA) for working-age military retirees under the age of 62 by 1 percentage-point below inflation. Retirees have to have served 20 years to be eliible for the pension.

The Pentagon is in an awkward position on the retirement cuts because they endorsed the overall budget deal, which reversed $31 billion of the automatic spending cuts known as the sequester over the next two years.

Fox and Adm. James Winnefeld, vice chairman of the joint chiefs, who are testifying before the Senate Armed Services Committee on the issue Tuesday, appeared to seek a middle ground on the COLA cuts, recommending grandfathering in current service members and a review of the overall issue.

Defense Secretary Chuck Hagel has endorsed general compensation reform, warning that rising costs threaten to eat up too much of the Pentagon budget.
"We cannot afford to sustain the rate of growth in military compensation we’ve experienced over the last decade," Fox said Tuesday. "The one-third of the defense budget consumed by military compensation cannot be exempt as an area of defense savings. We must find ways to slow the rate of growth."

The Pentagon urged Congress not to make any additional changes to military compensation until a congressionally mandated panel tasked with studying compensation issues its findings. The report is due by February 2015.

In her testimony, Fox also said the Pentagon was not behind including the military COLA reductions in the budget deal, as some have suggested.

“To my knowledge, no DOD officials were consulted on the details” of the budget deal, she said.

Senate Armed Services Chairman Carl Levin (D-Mich.), who convened Tuesday’s hearing, said that he opposed the pension cuts.

“I believe the COLA reduction is wrong because it targets a single group — military retirees — to help address the budget problems of the federal government as a whole,” Levin said.

Sen. James Inhofe (R-Okla.), the top Republican on the panel, called for repealing the pension cuts.

"We should not be having this hearing today because these changes should not have happened in this way. The negotiators of the budget deal never consulted the SASC and chose to disregard the ongoing work related to this issue," Inhofe said.

Budget hawks, including budget deal co-author Rep. Paul Ryan (R-Wisc.), have defended the reductions to military retirement benefits as a modest change that is needed to start curbing military personnel costs.

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