Military retirees will see a decrease in their pension plans if the
bipartisan budget agreement is adopted, while civilian federal employees
will be exempt.
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.
New federal employees who are hired after Jan. 1, 2014 will also be
required to pay 1.3 percent of their pay more into their pension plans.
However, federal retirees will continue to receive their generous
pension benefits and current employees will not be required to pay more.
Civilian government workers will be grandfathered in at their current contribution rate of 0.8 percent.
Ryan contends lowering
the cost-of-living adjustment (COLA) for military retirees under 62
will decrease the deficit by $7 billion over 10 years.
Military personnel that enlisted after 1980 currently have the choice
between two retirement plans. The majority of the military prefers the
“High Three” plan, which offers a full COLA equal to inflation as
measured by the Consumer Price Index (CPI).
An alternative plan, the “Redux,” provides a lump sum of $30,000 upon
retirement, but the cost-of-living adjustment is equal to inflation
minus 1 percent.
According to the Congressional Research Service (CRS) as of 2009,
244,476 military service men and women chose the High Three plan, while
only 14,605 opted for the Redux.
If the budget agreement is adopted, all military retirees will be
forced into a plan similar to the Redux plan, but they will not receive a
lump sum upon retirement.
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