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Military Pension

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General Michael W. Hagee33rd Commandant of the Marine Corps

December 1, 1944 -

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Veteran Population 2004

Age Veterans

55-59 2,171,604

60-64 3,571,932

65-69 2,552,834

70-74 2,233,818

75-79 2,232,754

80-84 1,707,657

85-90 715,818

90+ 170,114

Total 15,356,531

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Veteran Poverty Rates 2000

. 0%

. 0%

. 0%

. 0%

.20%

. 0%

. 0%

. 0%

.00%

.20%

Vietnam'

Feb '

J

y '

KoreanWar '

0 '

WWII '

0'

Period Of Service

Med ian Age

Vietnam 3.2

2.

Korean W ar 0.

WWI I .

% Em p oyed

Vietnam . .

Korean War 2 .

W W II .

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Projecte Retirees

Year Total Retirees Retiree Expen itures

2005 1,803,189 $36,560,715

2006 1,817,590 37,885,117

2007 1,834,795 38,295,7132008 1,847,855 40,743,999

2009 1,857,539 42,286,304

2010 1,862,769 43,580,141

2011 1,863,920 44,770,978

2012 1,863,549 45,940,324

2013 1,861,295 47,103,219

2014 1,856,288 48,419,023

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Three Types

Final Pay

High 36

Career Status Bonus / Redux (CSB)

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Final PayEntere ervice Prior to epte er 1980

How it works

Take your last onth payReceive 50 o your last onths pay as your pension

Every year o service a ter 20 years o service raisesyour pension y 2 5 or each a itional year oservice

Receive up to a axi u o 75 o ase pay or 30

years o service

A juste yearly or cost o living increase (C LA)

No Bonus

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High 36Entere ervice etween epte er 8th 1980 an August 1986

How it works

Take the average o the highest 36 onths ase pay

Receive 50 o your average highest 36 onths asepay as your pension

Every year o service a ter 20 years o service raisesyour pension y 2 5 or each a itional year o

serviceReceive up to a axi u o 75 o average 36onths pay or 30 years o service

A juste yearly or cost o living increases (C LA)

No Bonus

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Career tatus Bonus / Re uxEntere service a ter August 1986

How it works

At the 15 year service ark you ust choose

etween taking the C B/Re ux with a $30 cash onus($21 a ter taxes) an a 40 pension check, or the High36 retire ent with no onus an 50 pension

Take the average 36 onths asic pay

Receive 40 w/ onus or 50 o your average highest36 onths ase pay as your pension

Receive up to a axi u o 75 o average 36onths ase pay or 30 years

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Di erences in Re ux/Pre Re ux

Re ux

40 with onus: Every year a ter20 years has a ultiplier o 3 5on the pension

C LA = increase CP 1

C LA catches up y the age o62

Bonus o $30,000 in lu p su orisperse perio ically

Pre Re ux

50 w/o onus: Every year a ter20 years has a ultiplier o 2 5on the pension

C LA = increase CP

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Su ary

Retirement

System

Basis Multiplier COLA Bonus

Final Pay Last

Month'sBasic Pay

2.5% for

each Yearof Service

CPI No

High 36 Average of

the Highest

36 Months

Basic Pay

2.5% for

each Year

of Service

CPI No

CSB

REDUX

Average of

the Highest

36 Months

Basic Pay

3.5% for

each Year

over 20

CPI-1% Yes

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Cost o Living A just ents

COLAs Since 1991

Annual cost of living

adjustments arenormally effective onDecember 1 and arereceived in Januarychecks.

Note: COLA is calculatedby the nationalConsumer Price Index.Cost of living increasesmay differ from state tostate.

Year C LA in

2000 2 4

1999 1 3

1998 2 1

1997 2 9

1996 2 6

1995 2 8

1994 2 6

1993 3 0

1992 3 7

1991 5 4

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Exa ple o Retiree Pay

Take the average retiree rank of an enlisted andofficer.

O-6 - 20 years - Pay 7,763.40

E-8 - 20 years - Pay 3,994.20

20 years today would mean entry in 1985 (high 36)

Assume 36 months average was 7764.40 and 3994.20

1 month pension: 0-6=3881.70; E-8=1997.10

1 additional year x2.5: 50% + 2.5% = 52.5%

Maximum: 0-6=5822.55; E8=2995.65

Yearly retire ent at 20yrs: 0-6=46580 40; E-8=23965 20

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DoD Office of the Actuary

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Current ssues with Military Pension Un er ines the goal o keeping skille personnel in the ilitary or ore

than 20 years

Me ian age at which pensioners egan collecting ene its was 43 Fewer

than 1 in 6 pensioners were 65 or over (1999)

Military personnel can retire in their early 40s even late 30s an egin toraw generous pensions

CSB/REDUX pension opt out Choice o pre-re ux or re ux

Tri-Care issue o extension or li e

Concurrent pay ents o isa ility an pension

ncrease in postage ue to law PL 108-18 USPS o ligate to pay the ilitarypensions o its e ployees

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USPS an Military Pensions

Law 108-18 US

PS

has to pay all o its e ploye retireilitary personnels pensions

USPS is the only govern ent agency that is require to payilitary personnel pension

Savings ro the re uction in pay ents to Civil ServiceRetire ent Fun has to e use to pay o the USPS e t to

the Treasury Must pick up the cost o 27 illion or its ilitary retiree

pensions

Result: 2 cent increase on sta ps co e 2006

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Positive Aspects o Pension Syste

Military personnel pay into Social Security eligi le or pay ents

Retirees can collect pension a ter 20 years service an still work towar s another pension inprivate sector e ploy ent

Average enliste retiree pension at 20 years is $23,965 20 with the national ean retire ent at$17,798 00

DoD an Treasury have an accurate projection o uture retirees so it is a le to a just its u geteach year to pay out ene its

n a ition, the DoD an Treasury are etter a le to plan or the long ter uture

VA Disa ility Tax Free

Concurrent pay ents approve

Tri-Care exten e or li e

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Bene its Availa le

Tricare Until the age o 65 where e icare woul take over

Tricare exten e or li e SSI age an inco e per itting Su si ize Housing an Housing Assistance Disa ility Bene its coinci e with pension as long as isa ility

oes not excee pension 2000 NDAA Disa ility to run concurrent w/pension Phase in

process over the next 10 years

E ucation Assistance Vocational Reha ilitation an E ploy ent Burial Bene its Low cost li e insurance Ho e loans an other loans

N TE: ther ene its availa le ro state to state

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Massachusetts A itional Bene its

Pu lic Assistance Annuities

Tax Exceptions

Registry Fees aive

New elco e Ho e Bill signe y Gov Ro ney(10/11/2005) that will increase ene its to veterans

Depen ent Bene its

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SUMMARY

Three types o ilitary pensions: Final Pay, High 36, CSB/REDUX

Military pay is generally low, however active ilitary receive housingan oo assistance The pension is only calculate on ase pay

Currently 1,803,809 persons receiving ilitary pensions with pensionexpen itures at $36,560,715

USPS only organization o ligate to pay e ployee ilitary pension

Pension is pai out o a trust un that is easily anage ue toaccurate uture projections o payouts

Pension is un e y tax ollars, DoD u get, an Treasury on s thataccu ulate interest

Pension is a juste yearly or cost o living increase

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SUMMARY

Military pension recipients receive inco es higher than the nationalean retire ent

Military personnel can retire as early as late 30s an go ack into thework orce

Retirees can work to supple ent their pensions an coul receive twopensions an SS y the ti e they reach age 65-67

ther ene its are availa le to retirees an veterans such as in kinene its an inco e supple ents

Although there is no availa le statistics or poverty rates o ilitarypersonnel receiving pensions, one can conclu e that poverty rates orveterans coul ecrease signi icantly i ull a vantage was taken o

ene its o ere to veterans

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QUESTIONS?

General George C Marshall

Dece er 31, 1880 Octo er 16, 1959