The military should transfer future military members and retirees to federal civilian programs like the TSP and the FEHBP to cut costs and modernize its benefit systems, according to a new commission report released Jan. 29.
The Military Compensation and Retirement Modernization Commission recommended the military move from a pension system that rewards 20 years or more of service to a blended plan involving a pension and Thrift Savings Plan contributions.
Under the current plan 83 percent of service members leave the military without any retirement benefits, while the proposed plan would give retirement benefits to 75 percent of service member because of its shorter vesting time, according to the commission.
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Current retirees and those earning pensions would be grandfathered in to the old system, according to the commission.
While service members can currently contribute to the TSP they receive no matching contribution from the military. Under the proposed plan – one that closely mirrors federal civilian plans - service members would see their contributions matched up to 5 percent of their salary, plus a base of 1 percent regardless of their contribution levels.
The commission also recommended the military create a new health care system modeled off the Federal Employee Health Benefits Program, which it notes is similar in overall enrollment size but operates with drastically lower costs.
See also: The Military Compensation and Retirement Modernization Commission Report
The Defense Department requires about $314 million and up to 2,900 employees to administer the military's TRICARE program, while OPM routinely spends less than $47 million to administer the FEHBP with a team of 100 employees.
But while the FEHBP can serve as a model service members would not join the existing system, but instead a new system where the military would contribute a greater share of health insurance
That new system would be for military families, reserve members and all retirees while active-duty members would still receive access to medical care through the military.
Photo Credit: John Bretschneider
"Additionally military members have made great sacrifices for their country and their health benefits should reflect this sacrifice," the commission wrote. "The commission believes the FEHBP cost shares of approximately 30 percent for employees and 70 percent for the government are not appropriate for military members."
Also, the FEHBP does not have the capability to absorb the military treatment facilities on military installations, which would make a direct transition to the FEHBP impractical, according to the commission.
The commission said those changes – along with others – would save the military $12 billion a year without reducing the take-home pay of military members.
Alphonso Maldon, chairman of the commission, said at a press conference Jan. 29 that he hopes Congress considers and passes the proposed changes into law.
"We don't have a clue what Congress is going to do. Our work for the most part is done. It's entirely up to Congress," Maldon said.
