Bridging the gap: A modest manpower management proposal from a Marine

By Lt. Col. Robert "Butch" Bracknell, USMC

Best Defense department of personnel reform

The Department of Defense needs to advocate for and implement certain reforms to ensure the Department is getting maximum return on manpower investments. Most notably, the 20-year retirement permits officers, including senior noncommissioned officers, to request placement on the retired list in the prime of their careers, denying the Department of Defense an opportunity to reap the benefits of 20 years of development and experience.

Smarter manpower management would find a way to extract additional value from a retirement-eligible servicemember by incentivizing his retention, perhaps in a reserve status, until service limitations.

In 2010, the Defense Business Board issued its report "Modernizing the Military Retirement System," recommending comprehensive restructuring of the military retirement system. The report concluded that comprehensive reform is warranted, and that a new retirement system based on an annual contribution model like the Thrift Savings Plan could contribute to military retirement sustainability. Citing unsustainable rises in costs, fairness to servicemembers who separate prior to retirement vesting, and the relative generosity of the military retirement system compared to civilian retirement systems, the board’s Task Group that executed the study recognized that the "binary nature" of the system "creates a strong incentive for personnel to leave shortly after 20 years." The authors observed "in some areas of specialization, military servicemembers are only then reaching their peak performance."

After their initial service obligation, typically four to five years, and occasionally up to 10-12 years or more, active duty members take one of three options: (1) they remain on active duty, (2) they move to the reserve component of their service, or (3) they resign or allow their enlistment contracts to expire and separate from the armed services permanently. Active servicemembers can retire from active service after 20 years, which entitles them to 50 percent of their base pay as pension, where "base pay" varies in terms of calculation depending on the statutory retirement calculation system that applies to a servicemember’s pay entry base date ("Final Pay", "High 3", "Redux", etc.).  Each year served above 20 years raises the pension by 2.5 percent. Thirty years is the normal maximum career limitation, entitling the servicemember to 75 percent of his base pay in retirement (at 30 years, the usual "service limitation"). In unusual circumstances, certain colonels (with specific and unique qualifications) and general officers can continue to accrue 2.5 percent "bumps" in retirement pay up to a 100 percent base pay retirement benefit.

Reserve servicemembers who elect to continue participating until they have satisfied reserve retirement eligibility criteria obtain the same retirement benefit based on years of accrued service, participation "points," mobilization time, etc., but the benefit generally is deferred until the retired servicemember reaches age 60. A typical career path for one of these servicemembers is to serve four to eight years on active duty, then move over to the reserves to complete a reserve military career while pursuing a "primary" civilian career.

As I contemplated my own retirement from active duty at year 21, I realized I could be ready for new professional challenges. Simultaneously, I realized not only that I had not completely whetted my appetite for military service, but also that I had developed expertise and skills that could still benefit my nation in uniform. I explored my options; my manpower managers informed me that I could move to the reserves, just as if I had only completed four, six, or eight years of military service (an initial service obligation, or an initial obligation plus one or two assignments thereafter). The problem with this plan is that I would be sacrificing completely a $45,972 pension (based on 2013 retirement at O-5 with 21 years) for the privilege of continuing to serve. I love service as much as any Marine who ever wore the uniform, but my family cannot afford to forfeit a vested $46,000 annuity so that I can continue to serve as a reserve Marine.

The stark choice between an active duty career beyond 20 years and a reserve career that only makes financial sense if the servicemember moves to the reserve component earlier in his career, rather than later, counsels that there ought to be an accommodation for servicemembers caught in the middle. A the retirement-eligible officer with specialized skill, experience, and training, who is willing to continue serving as a reserve officer should be permitted to do so, without incurring a substantial financial penalty for the privilege.

Assuming my post-military career prospects are such that I am not going to remain on active duty to year 28 or 30, if I retire and walk away, taking my O-5/21 year/52.5 percent benefit with me, I am also depriving the Marine Corps of 21 years of accrued active duty expertise, nearly four years of cumulative post-9/11 overseas and deployed experience, and a substantial investment in my graduate education and fellowships. If I move to the reserve component, I forfeit a vested $46,000 pension. No rational economic actor would take this deal. As a result, if I retire this year, some other agency or company will reap the benefit of the Marine Corps’s investment in developing me as a senior leader and technical expert for the past 21 years. There is no middle ground that would allow the military to reap that benefit, instead of some third party entity.

Moreover, the current system encourages the services to fill their reserve ranks with relatively inexperienced personnel — an average officer who serves as an active infantryman for four years and as a reserve officer for 12 years is almost always less experienced and less competent at his military trade than an average officer (with similar intellect, talent, etc.) who spends all 16 of those years on active duty. Similarly, the officer who spends 25 years on active duty is deprived of the rich experience of life in the private sector or in another government agency. The absence of post-military experience may yield a less mature business sense for finance, logistics, and process management when compared to a reserve component peer officer who spends four years on active duty and 21 years as a chief financial officer or production manager at General Motors or Boeing. These two communities might be bridged by allowing career active officers to retire and continue service in the reserve component, as a career active duty/career reserve "hybrid." Such officers might represent the best of both worlds: abundant active duty experience, augmented by post-retirement private or other government sector experience that would benefit the third "tier" (the last 10 years) of the officer’s combined active and reserve military career. Perhaps there ought to be a third "hybrid" personnel category that allows this to happen.

When an officer vests at 20 years and becomes retirement eligible under this notional system, he might have 3 options, instead of only 2 (stay on active duty or walk away). Those three options would be (1) stay on active duty, (2) walk away, (3) a hybrid option in which the board-selected officer could continue post-retirement as a reserve component servicemember while being paid the active duty pension already earned. In a case like mine, fo
r example, once selected by a combined, proportional board of active and reserve officers, the officer would retire at year 20 and begin immediately to collect his "normal" (50 percent) pension. He would continue to serve for another 10 years as a reserve component officer while starting his second, post-active duty career. At the end of that 10 year reserve portion of his career, the retirement benefit would be adjusted incrementally and proportionately to account for the additional service beyond the 20 year mark. In fairness to those who stay on active duty, any increase to the hybrid officer’s ultimate retirement pension would be fractionally adjusted; a smaller accrued benefit would vest in comparison to the hybrid’s active duty counterpart who stays on active duty until year 30. At year 30, he would be eligible to collect 75 percent of his base pay, and the hybrid who retired from active duty at year 20 might collect some smaller amount — perhaps only 57.5-60 percent at year 30 (0.75-1 percent premium per year served, rather than 2.5 percent per year). This would account for the 50 percent the hybrid would have already earned, plus some marginal additional compensation for the willingness to commit another 10 years in the reserve component. The formula might be adjusted to compensate for periods of mobilization; for example, if within that 10 year period of reserve service, an officer is mobilized for a major theater conflict for 2 years, then his active retirement would plus up to 55 percent, and the other 8 years of his reserve career might be compensated in retirement at the "normal" 0.75-1 percent rate. This notional officer eventually would retire with 22 years of active service (55 percent) of base pay, and his benefit would increase at age 60 to account for the other 8 years of reserve service (0.75-1 percent over eight years, for a 6-8 percent plus-up — equaling 61-63 percent of base pay retirement annuity).

Purists may intone: "Bah, humbug. Pick one or the other. This is waffling. This is indecisive. This isn’t the way we do things." Duly noted. But if the goal is to maximize return on investment, and to extract more value and service out of high-value, well-trained experts — COIN experts, counterterrorism practitioners, logisticians, engineers, foreign area officers and regional experts, resource managers, aviators, strategists, cyberwarriors, physicians, etc. — who have earned the right to walk away through 20 years of service, then we need a new paradigm for doing so. Modifying force management statutes and regulations to permit a new category of "hybrid" officer would improve the experience quantum in the most senior reserve ranks and would temper the loss of institutional knowledge and expertise when exceptional officers retire at year 20. There likely are multiple ways to realize additional return on our institutional manpower investment that fit each service’s unique needs for manpower capabilities. This is but one of them.

Providing a third "hybrid" option in the future that makes financial sense to the servicemember while retaining talent for the total force is a win-win proposition. As we look forward to figuring out how to lean out the services and get the most return on our defense investment, it is clear the Department of Defense wastes an inordinate amount of human capital by allowing it to walk out the door at year 20 without providing any option for continued return on that 20-year investment. Proposing authority to Congress to modify the military retirement scheme to allow a 20-year retirement plus reserve continuation permits the Department to honor the "20 year deal" while extracting additional service value out of officers during the last third of an officer’s potential 30-year career.

This option is far superior to letting talented, capable officers simply walk away at the 20-year mark with an annuity and a gold watch, taking 100 percent of their abilities and experience with them to a new employer.

"Butch" Bracknell is a Marine lieutenant colonel on active duty, but perhaps not much longer.