Big cuts coming; lower pay raises start in 2015

Big cuts coming; lower pay raises among some cuts start in 2015

Army Times

By Andrew Tilghman and Rick Maze - Staff writers
Posted : Thursday Jan 26, 2012 14:00:23 EST

Defense Secretary Leon Panetta and Joint Chiefs Chairman Gen. Martin E. Dempsey outline the main areas of proposed spending cuts during a Pentagon news conference Jan. 26.

Service members can expect standard pay raises for the next two years — most likely 1.7 percent for 2013 — but that will change starting in 2015, according to a new budget plan unveiled at the Pentagon on Thursday.

Defense Secretary Leon Panetta released details of the 2013 budget, the first since Congress ordered the Pentagon to slash more than $450 billion in planned spending over the next decade, with a few glimpses of what may be in store beyond 2013.

Under the plan, military pay will continue to rise in tandem with the average annual increase in private-sector wages, but starting in 2015, raises may be capped a level slightly below annual growth in civilian pay.

“I want to make it clear that cuts in spending will not fall on the shoulders of our troops. There are no proposed freezes or reductions in pay. There is no change to the high quality of health care our active duty members and medically retired Wounded Warriors receive,” Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, said in a written statement Thursday. “But we cannot ignore some hard realities. … Pay will need to grow more slowly in the future.”

Congress will have to approve any reduction in military pay raises because the current law requires annual increases to match the official Employment Cost Index, which would result in an increase of 1.7 percent on Jan. 1, 2013.

The Pentagon also will renew its push to raise health care costs for military retirees under age 65. That includes a proposed increase in retirees’ enrollment fees, co-pays and deductibles. Nevertheless, Panetta added, “the cost borne by military retirees will remain below levels in most comparable private-sector plans.”

Specifically, defense officials will seek fee hikes on par with medical inflation, which runs 7 percent a year or higher, rather than pegging increases to the annual cost-of-living adjustments in military retired pay, which average about 3 percent over time, according to congressional aides briefed on the Pentagon’s plans. The most recent retiree COLA increase was 3.6 percent.

To address calls to scale back military retirement benefits, President Obama will urge Congress to “establish a commission with authority to conduct a comprehensive review of military retirement,” with an assumption that any resulting changes would affect only future recruits. Read more

The president’s 2012 budget request includes a proposal for a 1.6% military pay raise for 2012. While larger than last year’s military pay increase, the 2012 proposed military pay increase is the second smallest since 1962 and given the current budget environment many suspect that congress is considering a freeze.
As reported here, a recent Congressional Budget Office report says that military pay is higher than most federal employees, and Rep. Steny Hoyer (D-MD) has signaled a desire to freeze military salaries at the 2011 rate.
Check out the 2012 proposed military pay charts to see what a 1.6% raise would mean to your military paycheck.