Pentagon can't justify reserve retirement overhaul, report says
Legislative proposals to revamp the military reserve retirement system might end up costing the government more than it gains in retention, according to GAO.
The Defense Department does not have enough information to overhaul the retirement system for members of the military reserves, the Government Accountability Office concluded in a new report.
Specifically, the report (GAO-04-1005) said that Defense officials do not know how much the available retirement benefits affect retention rates among reservists.
GAO conducted the study because problems with Reserve and National Guard pay and benefits issues have received increased attention in recent months. As hundreds of thousands of reservists have been activated, several proposals have been raised in Congress to adjust their compensation. According to GAO, there are five pending legislative proposals that aim to lower the age when eligible reservists can receive their retirement annuities.
"[Defense] has not established thresholds for attrition attributable to retirement," the report said. Without this information, "it is not possible to assess the extent to which [Defense] is retaining the desired numbers of senior reservists or the extent to which retirement benefits influence decisions to leave or stay in the reserves."
GAO auditors said adjusting the reservist retirement system to make it more attractive could be extremely expensive and should be carefully considered.
The Pentagon requires that active duty and reserve personnel serve for 20 years before they gain full ownership rights to the government contributions made to their retirement accounts. The retirement systems also provide annuities based on 2.5 percent of basic pay for every year served and provide access to the Thrift Savings Plan, a 401(k)-style retirement plan for federal workers.
"Changes, if not evaluated from a total force perspective, could result in a significant increased cost with little or no benefit and may produce unintended consequences on [Defense's] active duty forces," the report said.
GAO called on the Pentagon to determine if reserve attrition rates are actually higher than Defense officials want or expect. If they are higher, GAO recommended a study on how much an adjustment to the retirement system would affect retention rates and how much those adjustments would cost.
Defense Department officials generally agreed with the GAO recommendations. Defense personnel officials noted that the RAND Corp. has been hired to conduct a detailed study of the reserve retirement system, and the results of that project are expected soon.