Service members weigh in on pay versus benefits

Senior military officers place a high value on retirement benefits and health care for their families while junior enlisted personnel tend to favor increases in pay, according to new survey results from a nonpartisan policy research institute.

Active-duty service members at the lower end of the pay scale would prefer higher basic pay over other forms of compensation, even if it meant shelling out more for their health care in retirement, the survey from the Center for Strategic and Budgetary Assessments found. The lure of a pay boost is much more enticing to junior personnel than to those in the senior ranks: Increasing basic pay for those with less time and experience in the military had six times more impact per dollar than raising it for senior officers. “This finding calls into question the wisdom of across-the-board pay raises,” the report said.

Still, 89 percent of midcareer service members who participated in the survey said they would prefer a $350 boost in annual pay in exchange for higher TRICARE Prime fees once they retire.

Service members at all career levels did not value the free TRICARE for Life benefit commensurate to the program’s cost to the Defense Department, the survey found. TRICARE for Life beneficiaries do not pay enrollment fees but are responsible for Medicare Part B premiums. Those over 65 beneficiaries accounted for 48 percent of all Defense health care cost increases between 2000 and 2005.

“DoD could rebalance the allocation of resources to move funding from undervalued forms of compensation, such as free TRICARE for Life, to more highly valued forms of compensation, such as basic pay,” stated the CSBA report, released Thursday at the National Press Club. “Rebalancing the compensation system would reduce costs while maintaining or improving the perceived value for service members.”

CSBA looked at how respondents valued certain types of compensation rather than the costs associated with them. Defense should look at recalibrating compensation based on service members’ priorities and where they are in their military careers by surveying personnel and their families periodically, said Todd Harrison, a senior fellow for defense budget strategies at CSBA and author of the report. “I think military people are more open to change than people realize,” he said. “I think they are more open to it than even they realize.”

Harrison said Defense should take a more comprehensive approach to overhauling military compensation rather than its traditional “piecemeal” approach. “It shouldn’t be just about cutting benefits or keeping faith [with service members] to maintain the status quo,” Harrison said. “It’s about getting better value.”

Personnel costs account for one-third of the Defense budget, and reforming the pay and benefits of service members, particularly retirees, is a controversial topic. The Pentagon needs to save money while also attracting and retaining a strong military; its compensation system “has failed to adapt to the unique needs of an all-volunteer military,” the report said. According to the Pentagon, during the past 12 years, basic pay has increased 62 percent, retirement costs have risen 78 percent and health care costs have spiked a whopping 203 percent.

CSBA’s survey included 2,655 respondents, 54 percent of whom were active-duty personnel. Harrison said senior officers were overrepresented in the study sample compared to more junior personnel. Senior officers are 6 percent of the active-duty population, but comprised 32 percent of the survey. Junior enlisted personnel are 45 percent of active-duty troops but were only 5 percent of the survey’s respondents. So, the results of the study were not analyzed in the aggregate “because of clear differences in demographics between the study sample and actual active-duty population,” the report stated.

Other findings from the survey included:

• Service members did not place a high premium on performance-based bonuses relative to the cost of implementing them. The latest Quadrennial Review of Military Compensation released in June recommended Defense make greater use of such incentive pay.
• Service members in all groups preferred maintaining the service requirement of 20 years for retirement benefits versus lowering it to 15 years.
• More than 80 percent of service members in all age groups preferred a 1 percent boost in basic pay in exchange for raising the age at which service members can collect their pensions to 50.
• The value respondents placed on military exchanges and commissaries outweighed the cost of those benefits to Defense.
• Of the additional benefits to military personnel, service members prized most highly their choice of duty station and length of tour.

Many concerns over changes to military compensation stem from fears that retirees or those close to retirement will lose out on the benefits promised to them over a lifetime of service. Defense Secretary Leon Panetta has pledged not to break faith with service members over compensation, but his message has not always resonated.

Harrison noted that while paying attention to service members’ priorities and behaviors when it comes to pay and benefits is crucial to making wise budget decisions, it’s also important for policymakers to judge the pros and cons of certain kinds of compensation on their own merits. For example, even if service members indicate they do not highly value free health care over other compensation, the country benefits from a fit military.