The student news site of Guilford College

The Guilfordian

The student news site of Guilford College

The Guilfordian

The student news site of Guilford College

The Guilfordian

Proposed overhaul on military pensions sparks debate


The U.S. military has been an all-volunteer institution for almost 40 years. Voluntary service is driven by its benefits — the armed services provide steady employment, housing, medical coverage and stability.

However, due to the current state of the economy, even the military is under fire.

A proposed overhaul of military retirement benefits is underway, with a Pentagon advisory panel recommending a switch from a pension system to a defined contribution plan.

Under the current system, a retired soldier gets 50 percent of their salary for life, provided they gave the military 20 years of service. According to military records, less than a quarter of military personnel stay in long enough to qualify for retirement benefits.

By changing to a defined contribution plan, in essence a 401k, all soldiers would collect yearly contributions in a retirement savings account.

“Most major corporations have made the switch already,” Professor of Economics Bob Williams said.

“Defined benefit pensions are low-risk to the employee,” said Williams. “The retiree is assured a certain income for the rest of his life. The problem for the military is that it doesn’t know how much it’s going to pay each soldier because that depends on life expectancy. And people live longer these days, so the cost to the military increases.”

This growing cost is forcing the government to seek out alternate plans for military retirement. If the proposal is passed, the Department of Defense will save $250 billion in the next 20 years, according to a Pentagon advisory panel.

Opponents consider military pensions to be an untouchable benefit. President Obama has been quoted as saying: “we cannot, will not, and we must not, balance the budget on the backs of our veterans.” And Williams points out that there is a reason that the armed services have not made the switch to 401k’s like most corporations have.

“If they switch it over, the military will see a significant decline in retention, unless they compensate with much higher salaries,” Williams said. “It’s a very tricky situation.”

Specialist Ben Miller, a soldier currently serving in Afghanistan, is not sure he’ll remain in the Army long enough to receive a pension. He would, however, benefit from the switch to a defined contribution plan, and would receive a higher monthly contribution due to his high-risk job.

“I don’t know of anyone joining nowadays thinking about retirement,” Miller said in an email interview. “They all want the enlistment bonuses and monthly pay. I don’t know when I’m getting out, but it would be nice to get something.”

At the same time, he said, there are soldiers who have served 19 years and are depending on a pension to live on when they get out in a year.

“It wouldn’t be fair if they didn’t get anything,” Miller added. “If (the military) does plan to change it, I would hope they take that into consideration. It’s not fair to tell soldiers one thing, then switch it just before they reach 20 years.”

Miller is also concerned that the armed forces will see a reduction in the quality and quantity of experienced soldiers.

“The military has been changing a lot,” said Miller. “It’s getting looser, and the discipline is fading. I wish it would tighten up.”

The unfortunate thing is that, according to Williams, “it doesn’t really matter what the soldier thinks. They don’t have the power. It’s going to come down to what the dynamics with Congress are. That’s the real issue. I suspect it will pass. I guess the argument is that this is the kind of change happening throughout our economy, and it’s catching up to the military.”

Leave a Comment
More to Discover

Comments (0)

The Guilfordian intends for this area to be used to foster healthy, thought-provoking discussion. Comments are expected to adhere to our standards and to be respectful and constructive. As such, we do not permit the use of profanity, foul language, personal attacks, or the use of language that might be interpreted as libelous. Comments are reviewed and must be approved by a moderator to ensure that they meet these standards. The Guilfordian does not allow anonymous comments, and requires a valid email address. The email address will not be displayed but will be used to confirm your comments.
All The Guilfordian Picks Reader Picks Sort: Newest

Your email address will not be published. Required fields are marked *