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Final Report of the Military Compensation and Retirement

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Final Report of the Military Compensation and Retirement Report of the Military Compensation and Retirement Modernization Commission Final Report January 2015 MILITARY COMPENSATION AND RETIREMENT MODERNIZATION COMMISSION CHAIRMAN The Honorable Alphonso Maldon, Jr. COMMISSIONERS The Honorable Larry L. Pressler The Honorable Stephen E. Buyer The Honorable Dov S. Zakheim Mr. Michael R. Higgins General Peter W. Chiarelli, U.S. Army, Retired Admiral Edmund P. Giambastiani, Jr., U.S. Navy, Retired The Honorable J. Robert (Bob) Kerrey The Honorable Christopher P. Carney EXECUTIVE DIRECTOR Mr. Robert B. Daigle DEPUTY DIRECTOR Ms. Nancy C. Crisman ASSOCIATE DIRECTORS Ms. Moira N. Flanders, U.S. Navy, Retired Mr. Christopher T. Meyer, U.S. Navy, Retired Ms. Susan Schleigh Mr. James Graybeal, U.S. Navy, Retired Mr. Christopher Nuneviller, U.S. Army, Retired GENERAL COUNSEL Ms. Elizabeth DiVecchio Berrigan, U.S. Army, Retired Report of the Military Compensation and Retirement Modernization Commission Final Report January 29, 2015 COMMISSIONERS’ LETTER January 29, 2015 We are honored to submit to the President and the Congress of the United States the enclosed recommendations to modernize the Uniformed Services’ (the Services) compensation and retirement system. We are confident these recommendations will ensure that the Services can maintain the most professional All-Volunteer Force possible, during both peacetime and wartime. Our confidence stems from our unwavering commitment to the interests of Service members and their families. In fact, our recommendations, which all members of this Commission unanimously support, are designed to protect both the overall value of the current benefits package and the quality of life of the 21st century Force—those who serve, those who have served, and the families that support them. The Services’ compensation system provides the Nation with an All-Volunteer Force without peer. This fact has been proven during the last 42 years and decisively reinforced during the last 13 years of war. After 42 years of an All-Volunteer Force, the President and the Congress agreed that it was time to study in detail the pay and benefits of the Services. The Services require flexible, modern, and relevant compensation tools to continue to recruit and retain the high-quality men and women needed to protect and defend our Nation into the future. Consequently, the Services must be empowered with flexible personnel-management tools to shape the force as security needs change. Our proposed reforms provide additional, yet fiscally sustainable, options for Service personnel managers to design and manage a balanced force. Pursuant to the National Defense Authorization Act for Fiscal Year 2013, our recommendations are limited to compensation, retirement, and benefits modernization issues. Our volunteer Service members are the strength of our military, and it is our continuous duty and obligation to ensure that the Services are properly resourced. National security is a Constitutional priority, and fiscal challenges facing our Nation cannot be solved by focusing solely on the military. Necessary resources include compensation and benefits for our Service members and their families, who also deserve long-term stability. It is our view that the current era of ongoing Service budget reductions and uncertainty is adversely affecting readiness and is increasing risks in our Nation’s ability to meet growing national security requirements. Our recommendations improve the efficiency and sustainability of compensation benefits, and they enhance the overall value of those benefits. Our military pay and retirement recommendations grandfather the retirement pay of existing retirees and those currently in the Force. They also maintain the majority of the existing retirement structure, which is an important retention tool, while allowing members of a younger, more mobile work force to begin investing in their own future. To better meet the needs of our Reserve Component, we recommend streamlining Reserve Component duty statuses. We further recommend an increase in Service members’ opportunity for coverage in the Survivor Benefit Plan. In considering the military health benefit, we focused on sustaining medical readiness by recommending a new readiness command, supporting elements, and framework for maintaining clinical skills. This system would ensure that today’s medically ready force would continue to provide the best possible combat care. Our recommendations also improve access, choice, and continuity of care for family members, Reserve Component members, and retirees. These recommendations maintain or reduce the cost of health care for the vast majority of families of active-duty Service members and establish a fund to lessen the burden of chronic and catastrophic conditions. We recommend ways to increase collaboration and resource sharing between the Departments of Defense and Veterans Affairs. The net result of these recommendations is a modernized health care system that should benefit our Service members, veterans, retirees, and family members far into the 21st century. Our recommendations related to quality of life focus on enhancing benefits for Service members and their families, while improving cost-effectiveness. We recognize the historically transformative power of the GI Bill. In particular, the Post-9/11 GI Bill has been effective in improving the education level of numerous Service members, veterans, retirees, and their families. Our recommendations improve the sustainability of these education benefits. Many Service members, retirees, and their families articulated the importance of Department of Defense commissaries and exchanges. Our findings reflect their view, and we recommend ways to maintain these benefits at lower costs. We propose several enhanced benefits for Service members and their families, including additional coverage for exceptional family members, budgeting for child care facilities, academic monitoring of dependents in public schools, nutritional assistance coverage, access to space-available travel, and Service member transition support. We thank all who have supported the efforts of the Commission, especially the many Service members, veterans, retirees, and family members who engaged with the Commission directly. The Commission has received, via in-person and survey responses, feedback from more than 100,000 active-duty Service members, Reserve Component members, veterans, retirees, and their families. We have met with more than 150 Government agencies, military advocates, research institutions, and related interest groups. We are confident that the recommendations put forward in this report offer an improved compensation and benefits package. Ensuring Service members and their families are cared for is a sacred responsibility of a grateful Nation. Being part of the public discussion regarding how we, as a Nation, modernize their benefits and fulfill this obligation has been our great honor. We are confident that implementing these reforms will move the All-Volunteer Force toward a future that is in the best interest of our Nation’s security and that can be fiscally sustained. We believe, for those who serve and have served to uphold the military’s highest traditions and heritage, and the families that support them, the Federal Government must fulfill its obligation with its enduring commitment in war and in peace. Respectfully submitted, __________________________________ Hon. Alphonso Maldon, Jr. Chairman __________________________________ __________________________________ Hon. Larry L. Pressler Gen. Peter W. Chiarelli, USA (Ret.) __________________________________ __________________________________ Hon. Stephen E. Buyer ADM Edmund P. Giambastiani, USN (Ret.) __________________________________ __________________________________ Hon. Dov S. Zakheim Hon. J. Robert Kerrey __________________________________ __________________________________ Mr. Michael R. Higgins Hon. Christopher Carney THIS PAGE INTENTIONALLY LEFT BLANK TABLE OF CONTENTS COMMISSIONERS’ LETTER .............................................................. III TABLE OF CONTENTS ..................................................................... VII LIST OF FIGURES ............................................................................. IX LIST OF TABLES ............................................................................... XI LIST OF ACRONYMS ....................................................................... XIII 1. EXECUTIVE SUMMARY ................................................................. 1 2. GENERAL CONCLUSIONS ............................................................ 9 3. RECOMMENDATIONS ................................................................. 19 Pay and Retirement ........................................................................................................................... 19 Recommendation 1: Help more Service members save for retirement earlier in their careers, leverage the retention power of traditional Uniformed Services retirement, and give the Services greater flexibility to retain quality people in demanding career fields by implementing a modernized retirement system. ....................................................... 19 Recommendation 2: Provide more options for Service members to protect their pay for their survivors by offering new Survivor Benefit Plan coverage without Dependency and Indemnity Compensation offset. ....................................................................................... 42 Recommendation
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