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No easy solutions for reservist retirement reform

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None of three proposed schemes to let military reservists get retirement benefits earlier would be cost-effective, the Rand Corp. says.

Reservists who complete 20 years of service must wait until age 60 to draw their retirement benefits, but active servicemembers draw their benefits whenever they retire. Reformers have long tried to reduce that inequality, and Rand looked at three possible ways to do so for a recent report (.pdf).

One would simply allow retiring reservists to draw their benefits immediately. Another would lower the age when they first receive benefits to 55, and another would lower the age from 60 by one year for every two years served beyond the 20 years required for retirement benefits.

The first proposal would increase costs per member substantially--retired reservists would simply get benefits for more years. Meanwhile, the reservist force size would decrease overall, Rand says, because many reservists would leave right after their 20th year of service.

The other two proposals would affect reservist retention slightly, but the costs would increase beyond the value of that retention, Rand says.

All three proposals were introduced in Congress in the mid-2000s, but none became law.

Despite the lack of a solution, reservist retirement reform has been under consideration for decades. "Few things undermine morale more in any organization than a sense among workers that they are compensated unfairly," Rand says.

That may be especially true in light of the fact that hundreds of thousands of reservists have been deployed since September 11, 2001. 

But reform has tended to not be a priority for the military or veterans groups. The military has generally had a stable supply of active servicemembers and reservists, so it's not clear from its perspective that it needs to change its retirement offerings to attract new members.

Retirees and veterans have resisted reform, as talk of changes to retirement sparks worries about benefit cuts and disruptions, Rand says.

For more:
- download the report, "A Policy Analysis of Reserve Retirement Reform" (.pdf)

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