First Command Reports: Career Servicemembers Divided Over Retirement Reform


APRIL 16, 2015, FORT WORTH, Texas – America’s career servicemembers are responding positively to a new recommendation for overhauling military retirement. Just don’t ask them to give up their current benefit.

The latest results of the First Command Financial Behaviors Index® reveal that 69 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) are in favor of the Military Compensation and Retirement Modernization Commission’s proposal to restructure the traditional 20-year retirement system as a blended program that includes a reduced pension in exchange for a lump sum bonus and a new 401(k)-type plan. Just 10 percent are unfavorable to the plan.

But this high level of support does not necessarily mean that servicemembers want the new proposal for themselves. Sixty-one percent of respondents who say they are likely to serve to full retirement prefer to be grandfathered in under the current system.

“These survey results suggest that career servicemembers are divided over retirement reform,” said Scott Spiker, CEO of First Command Financial Services, Inc. “They are relatively open minded about retirement reform in general, but they are understandably wary about giving up a significant financial benefit that has been a key part of our nation’s lifetime commitment to generations of men and women in uniform.”

In related findings, servicemembers also expressed support for the Commission’s recommendations for:

* Programs to improve financial literacy (61 percent),

* A new Survivor Benefit plan option (57 percent) and

* A new military healthcare system (51 percent).

The Commission’s recommendations are of high interest to career military families. March survey results reveals that two thirds (67 percent) of middle-class military families are aware of the Commission’s proposed changes to military pay and benefits. Out of that group, 53 percent are in favor of the proposed changes. In contrast, just 11 percent of civilian families are aware of the proposed changes. Twenty-five percent are in favor of them.

“Looking ahead, we expect to see an increasing awareness of the Commission’s recommendations in general and a more detailed and informed understanding of what these proposals could mean for America’s career military and their long-term financial security,” Spiker said. “Caution is well justified, particularly in regards to retirement reform. The Commission’s recommendation is a vague notion right now. It transfers risk from the government to the servicemember, but that risk is impossible to fully quantify because of a lack of details. It is premature to say if the financial value of the new proposal is higher or lower than the existing retirement benefit system. Until the Commission defines more of the details and assumptions that support their recommendation, servicemembers will find it very hard to make a meaningful judgment for their own financial future.”

About the First Command Financial Behaviors Index®

Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public’s financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence. www.firstcommand.com/research.

About Sentient Decision Science, Inc.

Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.

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