Military Retirement: Service Contributions Do Not Reflect Service Specific Estimated Costs and Full Effect of Proposed Legislation is Unknown
Abstract
As of fiscal year 2016, the Department of Defense (DOD) has approximately 1.4 million active duty servicemembers and 735,000 reserve component servicemembers with the potential to receive future retirement benefits.1 In fiscal year 2016 the Military Retirement System, to which DOD contributes, paid approximately $57.2 billion in retirement benefits to approximately 2.3 million participants. As of the end of fiscal year 2016, the Military Retirement System had a present value of future benefits of over $1.6 trillion. Military retirement benefits, including funding for survivors of deceased servicemembers, are funded through the Department of Defense Military Retirement Fund (Fund).2 Since fiscal year 1984, the Fund has operated under a financing procedure where DOD makes monthly contributions based on percentages of basic payone for all active duty and one for Select Reserve duty servicemembersand the total amount of basic pay accrued that month for the same population.3 We refer to these monthly contributions as DODs share of the retirement systems normal cost.4 Additionally, a lump sum payment is made to the Fund each year by the Department of the Treasury to amortize existing unfunded accrued liabilities.5 Section 1002 of S. 1519 (Section 1002), a bill for the National Defense Authorization Act for Fiscal Year 2018, proposed that the monthly contribution rate be percentages of basic active duty pay and reserve component pay specific to each uniformed service, rather than aggregated, and applied across all uniformed services. Section 1002 would amend 10 U.S.C. 1465, the statute that directs the determination of contributions into the Military Retirement Fund. The provision was not adopted. Conference Report 114-404 accompanying H.R. 2810, a bill for the National Defense Authorization Act for Fiscal Year 2018, contained a provision for us to assess the effect of the change proposed in Section 1002.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 04, 2018
- Accession Number
- AD1170666
Entities
People
- Bob Dacey
- Brenda S. Farrell
- Courtney Lafountain
- Felicia Lopez
- Frank Todisco
- Martin de Alteriis
- Michael Perkins
- Norris Smith
- Vincent Balloon
Organizations
- United States Government Accountability Office