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Newsmaker: Maj. Gen. Arnold L. Punaro

By Tom Philpott

Summer 2008

The Commission on the National Guard and Reserves delivered its final report to Congress and the Department of Defense earlier this year. Some of the most surprising and controversial recommendations in the report call for sweeping changes to military compensation and to personnel management systems, both for active-duty personnel and reserve component members.

These include phasing out the 20-year military retirement system in favor of a plan that allows vesting in pension benefits after only 10 years’ service; government contributions to a Thrift Savings Plan; new pay gates to encourage longer careers; annuities delayed until age 57 to 62 depending on total years served; replacement of the up-or-out promotion system; and replacement of the traditional time-in-grade military pay table with a new pay system emphasizing individual skills and performance.

The commission’s chairman, retired Marine Corps Reserve Maj. Gen. Arnold L. Punaro, discussed the report’s key findings with “Military Update” columnist Tom Philpott. The following is an edited transcript prepared exclusively for Military Money.

What’s behind the Commission’s call to establish and better support an “operational” Guard and Reserve?

Congress created the commission to step back and take the long-term view. Their instinct was that some fairly fundamental things were changing with the military [and how it was being used in Iraq and Afghanistan]. They weren’t really sure what that was or what we needed to do… But commissioners agreed [the current level of deployments] wouldn’t be feasible in the short term, or sustainable in the long term, if we didn’t make some fundamental and sweeping changes.

We came to the conclusion that there are no viable alternatives [to relying heavily on the Guard and Reserve]. Without the 600,000 Guard and Reserve personnel that have been mobilized – serving in Iraq and Afghanistan and at home – or the 100,000-plus who are mobilized today, the all-volunteer force would be in trouble. It was not designed for sustained combat. You’d a have to go back to the draft, which is not an option supported by the politicians or the active-duty military.

Also, we concluded that to answer the threat to the homeland, which is real and serious, the Guard and Reserve have a significant operational and skill advantage, as well as a geographical advantage. There is an economic cost advantage to having those capabilities in the Guard and Reserve.

Why are the major changes you proposed in compensation targeted at the active-duty force as well as Reserve components?

We’re arguing that we have to have a continuum of service.  We can no longer manage in stovepipes – one system for 1.4 million active-duty members and another for 800,000-plus drilling reservists.

We need a more flexible system that allows members to move from active duty to the National Guard to civilian life and back again. If you had an integrated personnel management, pay, promotion, health and retirement system, you would get true value. We think that’s the way to go.

The people we need to attract are not going to be looking for the kind of rigid types of careers we see in our military today. Just about every study that has looked at this the last five years has come to the same conclusions.

We felt that to have a truly operational Guard and Reserve, it must be integrated with the active component, which means very substantial changes in the personnel management system – from pay to promotion to force management to retirement. And it has to be done as a coherent whole.

Your commission recommends early vesting in military retirement, for example, so that a servicemember could leave before 20 years and receive some retired pay later in life. You also want members to be free to leave service and return with greater ease.

The Gate Commission, which recommended moving to an all-volunteer force in 1973, said three changes needed to occur to sustain a volunteer force for the long term. One was to get rid of the 20-year, all-or-nothing retirement plan. Two, we needed to get rid of the Cold War up-or-out promotion system. Three, we needed to get away from the time-in-grade pay system and go to a skill-based pay system.

None of those changes occurred, and you see what it requires to keep the all-volunteer force afloat today. Active-duty manpower costs have doubled in the last five years. The population of military retirees now exceeds the active-duty force by 400,000. You can’t wish away the basic arithmetic of the cost of active-duty manpower and retired manpower.

Your report calls for a five-year period of transition so people in the system today wouldn’t have to worry about these changes if they didn’t like them.  If they see something they do like, they could move under the new system.

Yes, everybody would be totally grandfathered if they chose to be.

What we propose would provide a benefit to many more people who serve in the military. Currently, 85 percent who enlist never earn any retirement. Only 22 percent of people in the Guard or Reserve ever retire. So we’re talking about a $60 billion-a-year bill – retired pay and medical care – for the very small percentage of people who actually join our military. For the people who actually get a retirement, what a wonderful system it is. But the vast bulk of the people don’t get anything.

The new type of force we envision would give the individual – and the Department – more flexibility. There still might be people who would want the very traditional 20-year career. But there may be a lot more who want a more flexible opportunity. They wouldn’t be penalized for serving in the operational reserve and guard, gaining some civilian skills and then moving back and forth.

There’s a pretty good reason that, despite studies over the past 35 years calling for the demise of the 20-year military retirement, it survives. It’s the prize, the golden ring. How do you fight that?

I say to those who see their job as protecting benefits for the next generation: Put your trust in the wisdom of people coming into the military. These young enlisted members and officers are smart kids… Stop trying to protect them from themselves. Let them look at new options and make up their own minds. Don’t be afraid of giving them the ability to make choices.

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Tom Philpott writes “Military Update,” a syndicated weekly news column for daily newspapers near military bases. It can be read online each week at www.military.com and www.fra.org.

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