According to a news report from The Washington Post, part of the recently approved bipartisan budget deal will call for a one-percentage-point reduction in the annual cost-of-living increase for veteran pensions. The reduction is scheduled to take effect in 2015. Military pensions will be recalculated at age 62 so retirees thereafter receive the same amount as if the reduction had never happened.
Just as the civilian retirement plans are dealing with people living longer and spending longer in retirement, so is the military. The news report cites Department of Defense figures showing that in 2012, 2.3 million military retirees and survivors of those killed in action received about $52 billion in payments, a nearly 50% increase from 2002.
The news report quotes one of the authors of the budget deal, House Budget Committee Chairman Paul Ryan (R-Wisconsin), as saying that the reduction is “a reasonable adjustment to a program that benefits a small portion of military men and women, on 17% of whom serve long enough to qualify for a pension.”
Ryan also cites the fact that a service member enlisting at age 18 and retiring from military service at age 38 would only see their lifetime pension benefit go from $1.8 million to $1.7 million. For one retiring at age 44, the difference would be smaller—closer to $30,000 over the service member’s lifetime.
In deference to feedback from veterans, says the news report, the reduction language will be amended to exempt disabled military retirees and survivors of those killed in action.
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