A Framework For Restructuring The Military Retirement System

In an era of fiscal austerity, the current military retirement system has come under intense scrutiny. Military retirement costs continue to escalate, in part because retirees are living longer, and in part because the military must set aside accrual payments as the
retirement system transitions to a fully-funded system. In response to these escalating costs, several pension reform proposals have emerged that yield significant cost savings.
The authors argue that many of these reform
proposals focus too narrowly on cost containment and fail to consider how pension reforms could
significantly lower the well-being of personnel and adversely affect retention. They develop a holistic framework for evaluating pension reform proposals that
considers not only overall program cost, but also impacts on personnel inventory, service member well-being, and public perceptions. Using this framework, the authors evaluate: a set of reforms discussed by the Department of Defense Business Board; incremental changes to the existing pension system; and their own pension reform proposal.