WASHINGTON — Congress is revisiting its decision to cut annual cost-of living adjustments to pensions for most working-age military retirees after talk of the cuts drew outrage from veterans groups and others.
The budget agreement approved this month reduced those adjustments by 1 percent annually once a service member retires until that retiree reaches age 62.
Lawmakers on the Senate Armed Services Committee, back from a week-long break in their home states, said they're interested in repealing the COLA change that is scheduled to take effect Dec. 1, 2015. But Pentagon officials asked them to hold off on making any more changes until a commission completes an extensive review of compensation and retirement benefits. That report is due in February 2015.
Sen. Roger Wicker, R-Miss., said there is broad agreement to act more quickly.
"This is a wrong that should be fixed," Wicker said. "It doesn't make any sense if we're all in agreement on this to wait, unless you want to hold out the possibility that we'll stick with it."
Christine Fox, the acting deputy secretary of defense, said compensation rates are unsustainable and changes need to be made to ensure military readiness, but the department was never consulted about the COLA cut. She said the Pentagon prefers a more comprehensive review of the retirement system that would exempt current service members and retirees from the changes made.
Fox also said the Defense Department does not support the COLA cut, and if Congress goes ahead with it, recommended that it be modified to include such a grandfather clause.
The pension program for military retirees is generally much more generous than those found in the private sector. Most people work about 40 years for about 20 years of retirement benefits. Military retirees often work about 20 years for about 40 years of retirement benefits.
In studying the future cost of military retirement, the Defense Business Board said in a 2011 report that military retirement costs would seriously undermine future military warfighting capabilities if changes were not made. That group is an advisory panel of business leaders that provides counsel to Pentagon leadership.
Overall, the pension cut approved by Congress reduces lifetime retirement pay by about 6 percent, from $1.7 million to $1.6 million — for an Army sergeant first class retiring at age 38.
Veterans groups argue that the pension helps to make up for the toll that 20-plus years in the military can take on a veteran, and it's a big reason why service members choose to pursue a military career. Veterans view paring it back as a breach of faith.
"It shifts funding obligations that are rightfully the government's onto the backs of those who already have sacrificed more for our country than any other Americans," said retired Gen. John Tilelli Jr., chairman of the board of the Military Officers Association of America.
And many voters seem to agree. During a press conference leading up to the hearing, Sen. Mark Begich, D-Alaska, said his office is getting more calls about the COLA cut than any other issue, including the health insurance overhaul.
"When you put this issue out there in front of the American people, they're outraged," Paul Rieckhoff, chief executive officer for Iraq and Afghanistan Veterans of America, said at the press conference.
Sen. James Inhofe, R-Okla., told veteran groups at the hearing that lawmakers overwhelmingly agree with them.
"You guys have won," Inhofe observed.
The COLA change saves the Defense Department roughly $500 million a year. Sen. Carl Levin, chairman of the Senate Armed Services Committee, says it was wrong to single out military retirees in the effort to reduce the deficit. Not a single member of the committee voiced disagreement.
The COLA change is scheduled to take effect on Dec. 1, 2015, which Fox said gives a Military and Retirement Modernization Commission time to come up with its recommendations.
"Because of the complexity of retirement issues," Fox said, "we would respectfully ask that the Congress not make any more changes until the commission completes its work."
Sen. Lindsey Graham, R-S.C., said the challenge to rescinding the COLA cut quickly will be finding a way to pay for it. The savings from the cut is estimated at about $6 billion over 10 years, so lawmakers will likely need to find that amount of revenue or spending cuts to move ahead with any pension changes.
"The moment we find a bipartisan idea, we're off to the races," Graham said.