Saturday, August 14, 2010

The Problem With Petty Officer Gurney


Petty Officer First Class Ethan Gurney will retire from the Navy this fall, after 20 years of service. Critics of the military retirement system say that's too soon, creating long-term fiscal problems for the Defense Department (Stars and Stripes photo).


According to a Pentagon advisory board, Navy Petty Officer First Class Ethan Gurney represents what's wrong with the military retirement system.

Petty Officer Gurney joined the Navy out of high school, and has served honorably as an electronics technician for almost two decades. This fall, after reaching 20 years of active duty service, Gurney will retire from the Navy and begin drawing a retirement check--at the ripe old age of 38.

From the board's perspective, that's too soon. With advances in medicine and increasing longevity, Gurney and his fellow military retirees will live for decades after leaving active duty, collecting billions of dollars in pensions, health care and other benefits.

The Defense Business Board, tasked by Defense Secretary Robert Gates to find ways to cut Pentagon spending, says the current retirement system is "unsustainable" and must be fixed. Without reforms, payments for military retirees will grow from $47.7 billion this year, to just under $60 billion by 2020.

As Stars and Stripes recently reported:

The 25-member group of civilian business leaders suggests that the Defense Department look at changing the current system, even hinting at raising the number of years troops must serve before being eligible for retirement pay.

The current system “encourages our military to leave at 20 years when they are most productive and experienced, and then pays them and their families and their survivors for another 40 years," committee chairman Arnold Punaro told board members at their quarterly meeting late last month.

Among the "reforms" being suggested by the advisory panel: delaying payments to retirees, in exchange for earlier "vesting" in the program. One proposal being studied by the board would provide a limited retirement benefit for military members who serve as little as 10 years. Those personnel would receive their pension at age 60 under the reform plan, while those with 20 years of service would begin receiving checks at age 57--almost 20 years after some of them leave active duty.

The hypocrisy of the "reformers" is almost laughable. Board chairman Arnold Punaro worries about a system that "encourages [military members] to leave when they're most productive and experienced, then pays them, their family and their dependents for the next 40 years."

But Punaro hasn't declined his military retirement check. Turns out that Mr. Punaro is also a retired Major General in the Marine Corps. According to Forbes, he currently works as an executive Vice President at defense contractor SAIC, where his total compensation in 2009 topped $2.7 million. That's almost three times what Petty Officer Gurney will collect in military retirement pay, even if he lives to age 80. And we didn't include Punaro's USMC pension in that total, either.

Fact is, the typical military retiree is a lot closer to Gurney than General Punaro. When he leaves active duty later this year, Petty Officer Gurney will receive a gross monthly pension of just over $1,800. By the time you deduct federal and state taxes and allotments for such items
as the Survivor Benefit Plan (SBP), dental insurance and other expenses, Gurney's "rich" pension will be closer to $1,400 a month.

Indeed, the average person retiring from the military at the 20-year point is an E-6, the same rank as Petty Officer Gurney. Most are married, with kids in school, and (if they're lucky) that $1,400 pension will cover their mortgage payment. Compare that to say, the average annuity for a state employee in New York, New Jersey or California, and tell us
who's getting rich in retirement.

Punaro's critique also misses a pair of critical points. There are two primary reasons the military has always embraced an early retirement system. First, it's a powerful recruiting and retention tool, particularly for mid-level officers and NCOs, who form the backbone of our armed forces. Allowing retirement at the 20-year point keeps a lot of mid-level officers and non-commissioned officers in uniform, ensuring an adequate supply of experienced personnel.

By comparison, if the military allows individuals to earn delayed benefits after only 10 years of service, it would only accelerate the exodus of skilled troops. Individuals with highly marketable skills (including intelligence, nuclear power, special forces and contracting, to name a few) would leave at the first opportunity, further eroding experience levels at the most critical ranks.

Additionally, there's the matter of who's best suited for certain military jobs. No offense to General Punaro, but jobs like Marine rifleman, Army ranger, Air Force combat controller and Navy fighter pilot (to name a few) are best handled by the young. True, experience does improve with age, but reflexes, vision, hearing and physical conditioning tend to deteriorate as we get older. And sometimes, experience is no substitute for the strength, speed and stamina found in younger troops.

Another critic of the current system, Nathaniel Fick of the left-leaning Center for a New American Security, has wondered "Why we're paying 38-year-olds" as they embark on their second full career. Fick, a former Marine Corps officer, made the comment in a recent article published at the Foreign Policy website.

We think the best rejoinder to that argument comes from Petty Officer Gurney, a man who is (supposedly) the poster boy for problems in our military pension system. For 20 years of dedicated and faithful service, Gurney simply expects the Navy to meet the promise it made to him. And he observes that (relatively) few people are willing to meet the demands for that 20-year pension:

"No rational person would put up with 20 years of the hardships that you’re forced to endure if it wasn’t for the brass ring at the end of it all called instant retirement,” said Petty Officer 1st Class Gurney.

[snip]

“The continuous deployments, living conditions, remote and hazardous duty stations are unique to the military,” he said. “This isn’t a civilian company, so any civilian model that you use to compare to the military is impertinent. To do so is irresponsible at best.”

Bravo Zulu, Petty Officer Gurney. Couldn't have said it better ourselves. Unfortunately, Secretary Gates now views the military retirement system as Fiscal Problem #1, so some sort of reforms appear inevitable. Never mind that the current system has served the military well, and payments will eventually decline, as retirees from Korea, Vietnam and the Reagan eras pass on.

One more thing: we find the current fixation on military retirement rather curious, for other reasons. The Pentagon has suddenly discovered that its payments for retiree medical coverage are out-of-control, just months after the Obama Administration pushed through national health care coverage. Gee...doesn't DoD have the option of potentially pushing military retirees into the national plan, saving billions of dollars each year--and creating more "urgency" for preserving the new system? Coincidence? You decide.

Likewise, Secretary Gates (and his bosses in the White House) would like to find other ways to save money at the Pentagon. If they can put off pension payments for years after military retirees leave active duty, so much the better. I'm sure that DoD's actuaries have already calculated the number of personnel who will die during that "gap" between their retirement ceremony and the age of 57 or 60, when the first retirement check rolls in. How much would DoD save using that approach, and where will that money goes? So far, Dr. Gates hasn't answered that one.

Equally galling is the growing demand for the reform of military retirement benefits, while the "big" entitlement programs (Social Security, Medicare, Medicaid) just keep on growing. Even at the inflated totals cited in the Stars and Stripes article, military pensions represent only a fraction of our annual Social Security payments--and that system will go broke long before the armed forces retirement system. But it's (apparently) more important to fix military pensions, with little regard for the long-term impact on retention and experience levels in the ranks.

Go figure.

9 comments:

CJG said...

Just one quick correction, Punaro retired from SAIC in May (http://investors.saic.com/External.File?t=2&item=g7rqBLVLuv81UAmrh20Mp2AaHO5mlc3YS18PugxcSuEfPvjxvJpLFa+zgA7esUVxJsUYyuUX0MAaQRRPRS9E6g==). Doesn't change the point of the story, but just thought I'd point out that he retired at least partially to allow him to serve on the DBB.

fboness said...

I figure that in my time in the Army I was working a 4,000 hour year. The standard civilian full time employment year is 2,000 hours. I expect Petty Officer First Class Gurney has seen at least a 4,000 hour year.

Norming to civilian years means Petty Officer First Class Gurney has served 40 civilan equivalent years. Let the poor old guy retire.

tjbbpgobIII said...

When a service member retires at 20 years doesn't he get a choice of medical benefits for life for self and family or his retirement pay? That seems to be what I've understood from the retirees I know.

fmfnavydoc said...

One other thing to point out - look at the "wear and tear" that we put our bodies through when on AD. IN 26 years of active duty, I had 4 knee surgeries (three on the right, including an ACL repair 18 months before I retired), shoulder surgery, broke a bone in my foot while with the Marines, migraine headaches, Irritable bowel syndrome and a bad back. How many CEO's put themselves through that kind of stress during their careers?

Papa Ray said...

Yea, the crap has just started rolling down hill starting last year, and don't forget that they have two more years at least to really screw the military. I'm thinking it will make Clinton look like someone who liked the military before it is all over.

And the ROE? Well, I heard some of my youngest grandson's kids talking the other night. The gist of it was that they didn't want any part of a military that didn't allow them kill the enemy or in some instances to not even shoot back.

I didn't say anything because I wasn't supposed to hear it and it's hard to tell young kids much if you remember your own self at that [15-16] age.

As we are already bankrupt and printing our way into oblivion, we won't be able to have much of a military in a couple of years anyway.

Sad state of affairs? NO, it is way past that into a frighting state of affairs.

Papa Ray

Spook86 said...

Tjb--When a military member retires at 20 years, he receives a pension equivalent to 50% of his base pay, along with health care for the military member, his/her spouse and any dependent children still at home.

For those who serve over 20, the pension increases 2 1/2% a year for each year past the "baseline" retirement mark. If you serve 28 years, your pension is 75% of base pay, which does NOT include allowances for housing, food, special pay, etc. And, as pointed out in the post, the average military retiree is an E-6, who gets about $1,800 a month, before taxes and other withholding.

In terms of medical care, all military retirees are covered by TriCare for Life until age 65, when Medicare becomes their primary policy. Military retirees don't pay a premium for their insurance, but there is a minimum20% co-pay for all doctor's fees, medical procedures, etc. and a co-pay at civilian pharmacies as well. Retirees also have the option of "upgrading" to TriCare Prime, an HMO-style arrangement that costs an average of $600 a year in premium payments. Out-of-pocket expenses are lower under that plan, but it's difficult in many areas to find doctors who will accept TriCare prime.

As for when the benefits end, here's a rough guide. Dependent children lose their medical care at 18 (or up to age 23, if they stay in school). Retiree pay ends with the military member's death. Spouses may receive limited payments under the Survivor Benefit Plan, which is designed to bridge the gap between social security benefits and what the retiree was collecting. If memory serves, the maximum payment under SBP is about $1,200 a month, funded by an annuity purchased by the member at the time of his retirement.

kitanis said...

I retired as a E-7 with 23 years under High-3 in the USAF. So I got to have 50% of my base pay based on my highest 3 years of of service on my rank.. Unfortunately I only served 28 months as a E-7 because lo and behold.. the USAF decided to cutt my career field.. so after taxes etc.. I ended up with $1647 a month.

I still pay a small premium on Tricare for medical care.. You have to choose to do that upon retirement and you have to live in a area that still has Tricare doctors..

Things went fine when I got a job.. but later on.. I was downsized... and its not been easy to find work ever since.. my retirement is the only thing that has kepted me from bankruptcy.

Like lfboness mentioned... I use to average long hours days 14-16 hours were common and to be called into work even after I got home. Because the unit would say "can-do" even though many shops were under manned. For three of my last four years in.. I was a one man shop of authorized six slots.

Suddenly because Congress can not seem to stop spending money and can not manage to balance their pie-in-the eye programs with the realistic economy.. I as a Military Retiree is a problem?

There is something wrong.. I noticed that the politicians have not downsized their staffs and they pay them very well. I shold know.. I tried very hard to get one electected to congress this last primary in my state.

Scott R said...

As a fellow First Class like Petty Officer Gurney this political agenda is the stuff that truly concerns me. I have sacrificed 13 1/2 years of my life with another 2 and 1/2 years on this current enlistment remaining. Many would say it would be foolish for me to get out of the Navy after 16 years with only 4 years left to retirement. I would agree with them and I would tell myself the same thing if I were on the other side of the fence with someone telling me they were thinking about getting out at 16 years in the service. The issue is, if they try and change my benefits, as PO Gurney they are breaking their contract with me. If they want to see retention go down real quick, change the retirement plan. If they come up with some miracle plan that allows members to retire early and still receive the majority of their benefits even if it means they might have to wait 15 years or more. I guarantee you will see droves of people leaving the military. I proudly serve my country and I average around 70 - 90 hours a week of work depending on how many people I have in my division and how much duty I stand.

Seabee93 said...

If he is a First class, unless he something changed he did not have a choice he had to transfer to fleet reserve. They made it mandatory to retire if you don't make E7 by twenty. In the old days a lot of chiefs didn't make it til after 20 so what we got was a lot of inexperienced E7s and few experienced first classes. I would have loved to stay past 20.