A long-awaited report on the military's compensation system will include proposals for sweeping changes in how retirement is approached, the Military Times reported Wednesday.
The newspaper, citing anonymous sources familiar with the report, said its provisions will include a phase-out of the current system, which allows service members to collect a benefit immediately upon retirement after 20 years.
A hybrid system is set to be proposed as a replacement, one which will incorporate a smaller defined benefit plan, lump-sum payments and more cash-based benefits.
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In addition, the new system would incorporate a 401(k)-type investment account as a significant portion of a service member's retirement benefit.
The new plan would automatically enroll service members in the government's Thrift Savings Plan, with service members being responsible for managing their own accounts.
Money in the TSP is not accessible without penalty until the participant turns 59½. Troops would be required to serve a minimum period of time before they are eligible for full ownership of the account, and the government would likely contribute a percentage of basic pay that could vary based on years of service and deployment status.
In addition to the 401(k)-type benefit, there would also continue to be a DB component to the plan, but the coming proposal is expected to make it more modest than at present and restrict its availability until age 60 or perhaps even later.
Such proposed changes not only would have to be approved by Congress, but would affect only new recruits. Currently serving military personnel would be grandfathered into the existing system.
The Military Times said companion proposals to change the health benefits offered by the military are also expected, although they would likely affect troops presently serving — should such proposals manage to pass Congress.
The report was expected to be released Thursday.
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