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Troops prefer cash over in-kind benefits

Feb. 20, 2014 - 06:00AM   |  
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The head of the Military Retirement and Compensation Modernization Commission said that, as far as benefits are concerned, 'cash is king' among today's service members. (Mark Wilson/Getty Images)
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Proposals to front-load military compensation with more cash now rather than back-loading it with deferred, in-kind benefits later on are gaining traction with the commission tasked with recommending reforms to the current system.

“Cash is king” to today’s service members, said Alphonso Maldon Jr., the head of the Military Retirement and Compensation Modernization Commission.

In an interview, Maldon offered an early window into the commission’s work, which is slated for completion in February 2015. Many military officials and lawmakers expect the final report to jump-start a push for historic changes.

A preference for cash is a “trend we’re seeing,” Maldon said. “It could very well, at the end of the day, carry a lot of weight in the direction we might take.”

While military personnel costs are under mounting pressure, Maldon said his commission is not directly seeking to save money, but rather is focusing on long-term reforms to make military compensation more cost-effective.

“We believe we can bring about some efficiencies,” he said. “Perhaps in the long run there may even be some cost savings, but that is totally not our objective.”

The commission’s goal, he said, is to find ways to make troops more satisfied with each dollar the Pentagon spends on personnel.

Many experts say today’s system is inefficient because troops undervalue some non-cash benefits relative to the money spent by the government to provide them.

Translated into policy changes, that may mean the Pentagon protects cash components of today’s system such as housing allowances, combat pays, retention bonuses and incentive pays, while de-emphasizing in-kind benefits such as commissaries and child care services, as well as delayed benefits such as retired pay and subsidized health care in retirement.

Maldon and other commissioners have spent several months traveling and holding town hall-style events to gain insight into troops’ priorities. More empirical data will be collected via a worldwide survey this spring with detailed questions on which aspects of today’s system troops value most.

The same issues were explored in 2012 by a think tank that did a similar but smaller survey. The analysis from the Center for Strategic and Budgetary Assessments found that most troops prefer pay hikes now even if that means delaying retirement pay until age 50 or raising retiree health care fees.

In talking about military pay and benefits, officials often try to compare the military to the civilian world — for example, suggesting the military end its current fixed-benefit retirement system and go to a corporate-style 401(k) model with government contributions.

Maldon said many troops feel the unique aspects of service make such comparisons meaningless. “They have told us, ‘Don’t compare us to civilians.’ They feel very strongly about that.”

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