Adm. Mike Mullen, chairman of the Joint Chiefs, will not join a chorus of critics who oppose the $30,000 bonus offer made to careerists in their 15th year of service if they agree to accept a less generous retirement plan.
Mullen, in our interview two weeks ago, suggested the Redux bonus, officially titled the Career Status Bonus, is a reasonable tool to help hold down soaring personnel costs.
Soon the Military Coalition, a consortium of 35 military and veterans associations, will urge Congress to repeal the Redux bonus offer as a bad deal for almost any careerist enticed to take it.
“The Redux bonus saves the government incredible amounts of money,” said coalition co-chairman Joe Barnes who also is national executive director of the Fleet Reserve Association. “But over time the value of that decision is not very good for service members.”
If Congress can’t find dollars to kill the bonus, the coalition will urge lawmakers to force the services to do more to educate careerists on the value of retirement benefits they are trading away for near-term cash.
A worse case scenario is an enlisted member who retires at 20 years in pay grade E-7 at age 38. The lost in lifetime retirement from accepting the bonus is $344,400, according to the Center for Naval Analyses.
“I understand the issue very well,” said the JCS chairman Mullen.
He recalled a conversation several years back with his late friend, retired Adm. Donald Pilling, then co-chair of the Defense Advisory Committee on Military Compensation. Pilling shared with Mullen data showing what a strong pull cash-in-hand had on service members versus the promise of bigger retirement checks in their future.
“Pilling said in their sampling, across the board, young people are going to take the money. You couldn’t make the case to the 31-year-old that (they would be forfeiting) $300,000, or whatever the number is. They’re just too young. They just haven’t kicked into it yet. … Where he was headed with this was a compensation system that was much more affordable because of this kind of provision,” said Mullen.
“So where I end up on that is that I’m OK with” the Redux bonus, Mullen said, assuming “somebody is going to make a mature decision about what they want to do. … (T)he mathematical analysis supported doing that if you’re trying to bound the overall compensation system’s costs. Because they are extraordinary for us, and they’re going to go up.”
Accepting the Redux bonus gets more out of balance each year because it hasn’t been adjusted for inflation. To restore its purchasing power back to when it was conceived, in 1999, it would need to be $38,500 today, said Peter Rossi with the Department of Defense’s Office of the Actuary.
“The idea is to let it die a slow and painful death,” an official said.
Tom Philpott can be contacted at Military Update, P.O. Box 231111, Centreville, Va. 20120-1111, or by e-mail at: firstname.lastname@example.org