On Monday, March 30, the White House and the Pentagon agreed to support a proposed overhaul of military pay and benefits packages. According to USA Today, the change also includes putting servicemembers on a 401(k) retirement plan.
Military Times explained that the 15 recommendations were created by the Military Compensation and Retirement Modernization Commission and were officially sent to Capitol Hill in January. If these are all finally approved, they will establish new investment accounts for all military personnel. Additionally, they will reduce service pensions by 20 percent and revamp current insurance offerings to make them resemble typical civilian plans.
All together, the changes would save $12 billion annually. USA Today explained that this cost-cutting is a driving factor behind the adoption of the new plans, especially for the Pentagon. The source explained that the cost of supporting personnel according to the current benefits has gone up by 46 percent over the past 10 years. If it continues to expand at this rate, it will take up the entire defense budget over the next 24 years.
While no official commitment has been made, President Obama is expected to approve the pay overhaul sometime before April 30.