Military Pensions
Transcript of Military Pensions
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Military Pension
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General Michael W. Hagee33rd Commandant of the Marine Corps
December 1, 1944 -
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Veteran Population 2004
Age Veterans
55-59 2,171,604
60-64 3,571,932
65-69 2,552,834
70-74 2,233,818
75-79 2,232,754
80-84 1,707,657
85-90 715,818
90+ 170,114
Total 15,356,531
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Veteran Poverty Rates 2000
. 0%
. 0%
. 0%
. 0%
.20%
. 0%
. 0%
. 0%
.00%
.20%
Vietnam'
Feb '
J
y '
KoreanWar '
0 '
WWII '
0'
Period Of Service
Med ian Age
Vietnam 3.2
2.
Korean W ar 0.
WWI I .
% Em p oyed
Vietnam . .
Korean War 2 .
W W II .
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Projecte Retirees
Year Total Retirees Retiree Expen itures
2005 1,803,189 $36,560,715
2006 1,817,590 37,885,117
2007 1,834,795 38,295,7132008 1,847,855 40,743,999
2009 1,857,539 42,286,304
2010 1,862,769 43,580,141
2011 1,863,920 44,770,978
2012 1,863,549 45,940,324
2013 1,861,295 47,103,219
2014 1,856,288 48,419,023
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Three Types
Final Pay
High 36
Career Status Bonus / Redux (CSB)
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Final PayEntere ervice Prior to epte er 1980
How it works
Take your last onth payReceive 50 o your last onths pay as your pension
Every year o service a ter 20 years o service raisesyour pension y 2 5 or each a itional year oservice
Receive up to a axi u o 75 o ase pay or 30
years o service
A juste yearly or cost o living increase (C LA)
No Bonus
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High 36Entere ervice etween epte er 8th 1980 an August 1986
How it works
Take the average o the highest 36 onths ase pay
Receive 50 o your average highest 36 onths asepay as your pension
Every year o service a ter 20 years o service raisesyour pension y 2 5 or each a itional year o
serviceReceive up to a axi u o 75 o average 36onths pay or 30 years o service
A juste yearly or cost o living increases (C LA)
No Bonus
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Career tatus Bonus / Re uxEntere service a ter August 1986
How it works
At the 15 year service ark you ust choose
etween taking the C B/Re ux with a $30 cash onus($21 a ter taxes) an a 40 pension check, or the High36 retire ent with no onus an 50 pension
Take the average 36 onths asic pay
Receive 40 w/ onus or 50 o your average highest36 onths ase pay as your pension
Receive up to a axi u o 75 o average 36onths ase pay or 30 years
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Di erences in Re ux/Pre Re ux
Re ux
40 with onus: Every year a ter20 years has a ultiplier o 3 5on the pension
C LA = increase CP 1
C LA catches up y the age o62
Bonus o $30,000 in lu p su orisperse perio ically
Pre Re ux
50 w/o onus: Every year a ter20 years has a ultiplier o 2 5on the pension
C LA = increase CP
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Su ary
Retirement
System
Basis Multiplier COLA Bonus
Final Pay Last
Month'sBasic Pay
2.5% for
each Yearof Service
CPI No
High 36 Average of
the Highest
36 Months
Basic Pay
2.5% for
each Year
of Service
CPI No
CSB
REDUX
Average of
the Highest
36 Months
Basic Pay
3.5% for
each Year
over 20
CPI-1% Yes
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Cost o Living A just ents
COLAs Since 1991
Annual cost of living
adjustments arenormally effective onDecember 1 and arereceived in Januarychecks.
Note: COLA is calculatedby the nationalConsumer Price Index.Cost of living increasesmay differ from state tostate.
Year C LA in
2000 2 4
1999 1 3
1998 2 1
1997 2 9
1996 2 6
1995 2 8
1994 2 6
1993 3 0
1992 3 7
1991 5 4
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Exa ple o Retiree Pay
Take the average retiree rank of an enlisted andofficer.
O-6 - 20 years - Pay 7,763.40
E-8 - 20 years - Pay 3,994.20
20 years today would mean entry in 1985 (high 36)
Assume 36 months average was 7764.40 and 3994.20
1 month pension: 0-6=3881.70; E-8=1997.10
1 additional year x2.5: 50% + 2.5% = 52.5%
Maximum: 0-6=5822.55; E8=2995.65
Yearly retire ent at 20yrs: 0-6=46580 40; E-8=23965 20
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DoD Office of the Actuary
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Current ssues with Military Pension Un er ines the goal o keeping skille personnel in the ilitary or ore
than 20 years
Me ian age at which pensioners egan collecting ene its was 43 Fewer
than 1 in 6 pensioners were 65 or over (1999)
Military personnel can retire in their early 40s even late 30s an egin toraw generous pensions
CSB/REDUX pension opt out Choice o pre-re ux or re ux
Tri-Care issue o extension or li e
Concurrent pay ents o isa ility an pension
ncrease in postage ue to law PL 108-18 USPS o ligate to pay the ilitarypensions o its e ployees
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USPS an Military Pensions
Law 108-18 US
PS
has to pay all o its e ploye retireilitary personnels pensions
USPS is the only govern ent agency that is require to payilitary personnel pension
Savings ro the re uction in pay ents to Civil ServiceRetire ent Fun has to e use to pay o the USPS e t to
the Treasury Must pick up the cost o 27 illion or its ilitary retiree
pensions
Result: 2 cent increase on sta ps co e 2006
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Positive Aspects o Pension Syste
Military personnel pay into Social Security eligi le or pay ents
Retirees can collect pension a ter 20 years service an still work towar s another pension inprivate sector e ploy ent
Average enliste retiree pension at 20 years is $23,965 20 with the national ean retire ent at$17,798 00
DoD an Treasury have an accurate projection o uture retirees so it is a le to a just its u geteach year to pay out ene its
n a ition, the DoD an Treasury are etter a le to plan or the long ter uture
VA Disa ility Tax Free
Concurrent pay ents approve
Tri-Care exten e or li e
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Bene its Availa le
Tricare Until the age o 65 where e icare woul take over
Tricare exten e or li e SSI age an inco e per itting Su si ize Housing an Housing Assistance Disa ility Bene its coinci e with pension as long as isa ility
oes not excee pension 2000 NDAA Disa ility to run concurrent w/pension Phase in
process over the next 10 years
E ucation Assistance Vocational Reha ilitation an E ploy ent Burial Bene its Low cost li e insurance Ho e loans an other loans
N TE: ther ene its availa le ro state to state
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Massachusetts A itional Bene its
Pu lic Assistance Annuities
Tax Exceptions
Registry Fees aive
New elco e Ho e Bill signe y Gov Ro ney(10/11/2005) that will increase ene its to veterans
Depen ent Bene its
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SUMMARY
Three types o ilitary pensions: Final Pay, High 36, CSB/REDUX
Military pay is generally low, however active ilitary receive housingan oo assistance The pension is only calculate on ase pay
Currently 1,803,809 persons receiving ilitary pensions with pensionexpen itures at $36,560,715
USPS only organization o ligate to pay e ployee ilitary pension
Pension is pai out o a trust un that is easily anage ue toaccurate uture projections o payouts
Pension is un e y tax ollars, DoD u get, an Treasury on s thataccu ulate interest
Pension is a juste yearly or cost o living increase
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SUMMARY
Military pension recipients receive inco es higher than the nationalean retire ent
Military personnel can retire as early as late 30s an go ack into thework orce
Retirees can work to supple ent their pensions an coul receive twopensions an SS y the ti e they reach age 65-67
ther ene its are availa le to retirees an veterans such as in kinene its an inco e supple ents
Although there is no availa le statistics or poverty rates o ilitarypersonnel receiving pensions, one can conclu e that poverty rates orveterans coul ecrease signi icantly i ull a vantage was taken o
ene its o ere to veterans
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QUESTIONS?
General George C Marshall
Dece er 31, 1880 Octo er 16, 1959