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New Retirement System Proposal From Quad Review.. My Head Hurts…

August 05, 2008

Second Volume of Tenth Quadrennial Review of Military Compensation Released
The Department of Defense released today the second volume of the report of the Tenth Quadrennial Review of Military Compensation (QRMC), which assesses the effectiveness of military pay and benefits in recruiting and retaining a high-quality force.
Every four years, DoD commissions a complete review of compensation principles and concepts for members of the armed forces. The 10th QRMC began in 2006.
DoD will study the recommendations for potential implementation and send selected proposals to Congress as proposed legislation.
The second part of the QRMC reviewed non-cash and deferred compensation, focusing on the following four topics:  retirement, Tricare, recruiting and retention incentives for health care professionals, and quality of life. Significant recommendations for each area follow.
Retirement. The commission recommended the department conduct a multi-year test of a new retirement system, to increase the services’ force management flexibility. This new retirement system would provide automatic contributions to service members’ TSP accounts, vesting, payments for reaching service milestones and separation pay. The commission maintains the new retirement system will provide greater equity, flexibility and efficiency, and may result in larger individual monetary outcomes.
Tricare. To ensure retiree fees for Tricare are fair to all retiree populations, the commission recommended under-65 retirees using Prime pay 40 percent of the Medicare Part B premium, and under-65 retirees selecting Standard/Extra pay 15 percent of the Part B premium. Family premiums would be set at twice the individual premium regardless of family size. Premium increases would be phased in over a four-year period. Over the years, the share under-65 retirees paid of their health care costs has declined, while over-65 retirees are paying a significantly higher portion of their health care costs. The commission’s recommendations will return a sense of parity between the two retiree populations, while ensuring the health system remains economically viable.
Medical Personnel. The commission examined options to increase the recruiting and retention of medical, dental and nurse corps personnel. The commission’s recommendations included increasing benefits for the Health Professions Scholarship, improving active duty nurse recruiting by expanding the market and adding educational opportunities, recruiting non-citizens with U.S. health degrees and leveraging inter-service transfer bonuses.
Quality of Life. The commission provided several recommendations to improve the efficiency and effectiveness of quality of life programs, including the adoption of health care and dependent care flexible spending accounts, creation of education vouchers, formation of military charter schools and changes to the child care system. The committee further suggested the department change the way it develops the overseas cost of living allowance rate, to be consistent with the methodology used in the continental United States.
This is the second volume of the study, covering non-cash and deferred compensation. The first volume was released in March, and focused on the following cash compensation areas: pay comparability, special and incentive pays, pay for performance and housing. Full recommendations, in greater detail, can be viewed on the Web at http://www.defenselink.mil/news/QRMCreport.pdf .

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