WASHINGTON (AP) — The Pentagon’s top civilian says it’stime to tame burgeoning military personnel
costs, but he’s facing a testof wills with the nation’s powerful veterans groups, which want no cutin their
benefits.Veterans groups are fighting curbs in annualpension increases for military retirees under age 62
that are part ofthe new budget deal passed by Congress last week and awaiting PresidentBarack Obama’s
signature. After a barrage of protests from the militarycommunity, lawmakers said they’ll review the cut
next year and possiblyreverse it. But Defense Secretary Chuck Hagel said Thursday that reformof military
compensation can’t be avoided."We all know that weneed to slow cost growth in military
compensation," Hagel told aPentagon press conference. "We know that many proposals will
becontroversial and unpopular. … Tough decisions will have to be made."Retirees want the
belt-tightening done elsewhere.Here’s a look at what members of the U.S. armed forces get now and the
debate:WHAT TROOPS EARNDueto pay and benefit boosts in recent war years, officials and militaryanalysts say
compensation is competitive with the civilian sector — andwell above it when comparing people with similar
education andexperience.For example, an Army private with fewer than two yearsof service and no dependents
earns on average about $40,400 annually,said Navy Lt. Cmdr. Nathan Christensen, a Defense Department
spokesman.About two-thirds of that is base pay and the rest a housing allowanceand a food allowance, with no
taxes paid on the two allowances. An Armycaptain with six years of service and no dependents averages
$93,800annually.Active duty military members also get all of theirhealth care for free. Their spouses and
children get free care atmilitary treatment facilities. If dependents use a private doctor,dentist or
pharmacy, they get the care through the department’s TRICAREsystem, paying no premiums and no co-pays, said
Austin Camacho, a systemspokesman.The force also gets what the Pentagon calls "qualityof life"
benefits, like help paying for continuing education, separateschools in some places for their children,
commissaries where they buyfood at an estimated 30 percent below retail prices and exchanges wherethey buy
other deeply discounted goods like clothing and householditems. Greatly discounted day care is available
through the department’schild development system, which officials say has grown to serve thelargest number
of kids daily among the nation’s employers — now thatmore than half of the 1.4 million-member force is
married and they have1.2 million children.While serving, some are and some aren’t ableto build much of a
retirement nest egg on their own. There’s a savingsplan, though there are no employer matching funds, and
moving every twoor three years due to reassignment can affect the service members’ability to build equity in
their homes and the spouse’s ability to builda career that brings in a good second income.WHEN THEY
RETIREThemilitary retirement system is unfair and costly. Only 17 percent ofservice members — those who
serve 20 years — get pensions, the Pentagonsays. Most people don’t stay that long, meaning 83 percent who
serveless than two decades get no retirement pay.But someone whoenters the military at age 18 and stays 20
years starts drawing pensionchecks worth half their base salary immediately at age 38 — rather thanhaving to
wait until their 60s — and gets the payments for life. It’s apractice without parallel in the private
sector, though some governmentagencies such as city police departments do it.Critics say 40years of pension
for 20 years of work is overly generous, but retireessay they deserve it for doing risky jobs that are tough
on them andtheir families and that the overwhelming majority of Americans don’tvolunteer for.A Navy Chief
Petty Officer who earned $80,000 ayear, is married and served for 20 years can immediately get a pensionof
about $2,200 monthly that would grow with cost-of-living increases.He or she can get free health care at
military facilities on aspace-available basis and can continue using commissaries — the lattertwo benefits
being a reason some retirees like to live near militaryinstallations, officials say. Those who enroll in
TRICARE insurance forprivate sector care can pick between two plans, paying only $274annually for an
individual or $548 for the family for the standard plan,far below civilian insurance costs.There are nearly
2 millionretirees currently getting military pensions at an annual cost to theDefense Department of $4.5
billion. Of those, 840,000 are under 62 — andmore than 80 percent of those were enlisted, as opposed to
higher-paidofficers.The retirement system hasn’t been changed materially inmore than 100 years and was
designed when people didn’t live as long,second careers were rare and military pay was low. Many people now
havesecond careers after retiring, collecting the pension as well as incomefrom their new jobs — and in
their 60s are also getting Social Securitypayments, to which they contributed while in the military.BREAKING
FAITH?Thechange provoking outrage among military and veteran groups this weekwould reduce retirement
benefits for working-age retirees. Starting Dec.1, 2015, cost-of-living adjustments for pensions of people
under 62would be modified to equal inflation minus 1 percent; then at 62,retirees would receive a
"catch-up" increase that would restore theirpensions to reflect levels as if the cost-of-living
adjustment had beenthe full consumer price index in all previous years.But theywouldn’t get back what was
lost, meaning a reduction of nearly $72,000in benefits over a lifetime for a sergeant first class who
retires atage 42, by one group’s estimate. Sen. John McCain, R-Ariz., said aveteran of identical rank who
retired at 38 would still wind up with$1.62 million in retirement pay over a lifetime.But officialshave said
repeatedly in recent years that changes in the system wouldnot affect current military members or retirees.
Rather, they would beapplied to future recruits."Keep your promise" was the theme of a lobbying
effort by the Military Officers Association of America.AmericanLegion National Commander Daniel M. Dellinger
said the group was"horrified" that the Senate could pass a bill "so unfair to thoseAmericans
who have served honorably in uniform."The Veterans ofForeign Wars predicted the change would prompt an
exodus of those atmidcareer once the U.S. economy rebounds, and that it will hurt effortsto recruit new
people into the all-volunteer force.CHANGE IS COMING, BUT WHAT CHANGE?By passing the pension cut now,
lawmakers jumped the gun on a review panel broadly studying modernization.Thenine-member Military
Compensation and Retirement ModernizationCommission was mandated in the last budget year to study the
fullbreadth of issues including regular military pay, health care, thepromotion system, retirement pay and
family support programs."Everything is on the table," Christensen said.In an era of tightbudgets,
personnel costs now make up nearly half of the Pentagon’sfunding, and officials fear continued growth will
force disproportionatecuts in other areas, such as training and equipment. Health costs alonehave
skyrocketed nearly 200 percent since the year 2000 and willballoon further in coming years without changes,
officials say."Modernization is a certainty," said James Hosek, a senior economist at the RAND
Corporation and expert on defense manpower.Retireesargue that cutting troop benefits is the last thing that
should be done— and some suggest efforts to curb personnel costs should first targetwhat they see as bloated
civilian staffs as well as redundant uniformedbureaucracy in which each service branch has its own medical
command,cyberassets, intelligence assets and uniforms —just to mention a fewcomplaints.Ideas already floated
for compensation changes includeearlier vesting in pensions; giving troops a lump sum on departurerather
than long-term pensions; slightly increasing health carepremiums; and replacing pensions with a 401(k)-type
saving plan, whichwould be offered, not forced on current members and retirees. Someanalysts say
modernization will inevitably mean less generous benefitsfor military members, but others hope that may not
be the case ifcreative efficiencies can be found.The challenge for thecommission is to reform programs so
they’re more affordable andsustainable and yet offer benefits attractive enough to keep drawingpeople to
volunteer for the nation’s armed forces.The panel is scheduled to make recommendations to Congress and the
president in May.Copyright 2013 The Associated Press. All rightsreserved. This material may not be
published, broadcast, rewritten orredistributed.