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Newly proposed plan seeks to provide retirement benefits for military personnel

07/25/11

After engaging in an eight-month study, the Defense Business Board recently presented a new plan to revamp the retirement system of the Pentagon. Under the recommended policy, troops would profit from a benefits program that would contribute funds directly to military workers' retirement savings accounts, similar to plans offered by many corporations.

Currently, troops simply receive the promise of a monthly income in the future. The new policy would see troops' receiving yearly retirement contributions that don't depend on the number of years served, a significant change as currently, military personnel cannot access funds until they're 59 and a half without having to pay substantial penalties. Factors like record of deployment, accepting hardship assignments and serving in more demanding jobs would also impact the amount of funds contributed to specific personnel.

Richard Spencer, the former Marine Corps pilot and finance executive who spearheaded the study, said "The current system is unfair, unaffordable and inflexible." The newly proposed plan would "Enhance the ability of the service member to build a meaningful retirement asset [with] complete flexibility for their lifestyle or desires."

Military personnel can also look into other options for securing their financial future in retirement, such as annuities. The yearly earnings made on annuities are untaxed, there's no contribution limit on them and annuities usually have flexible payment options, including periodic distributions or a lump sum payment.

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