When the Savings Kick In

The reforms proposed in the Military Compensation and Retirement Modernization Commission final report, released Thursday in Arlington, Va., will save considerable dollars across the US government, but some of the savings will take several decades to achieve. “While maintaining the overall value of the current benefits package, these recommendations offer efficiencies that reduce government expenditures by as much as $10 billion per year,” the commission’s report states in its conclusions. Chairman Alphonso Maldon and other commissioners touted savings as high as $12.5 billion, if all recommendations are implemented. But these savings will take time, and will go up as current spending assumptions and savings accrue with changes to the system, MCRMC spokesman James Graybeal told Air Force Magazine. For example, current service members and retirees are “grandfathered” into the current system but some could and will opt into the reformed system in the future. After an initial cost of some $961 million (in current dollars, according to the report) across the US government and the Department of Defense, annual savings from the recommendations would follow in Fiscal 2017, going forward—growing from $160 million in 2017 to $4.1 billion by 2020. The government eventually will save some $12.6 billion annually, but the reforms do not net this amount until 2053, under commission projections. (Link to final report; Caution, large-sized file).