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One wrong cut

January 1, 2014

Listening to the Paul Ryan Budget Reduction Bill, I've decided it is very good, except for the part that cuts the Veterans Pension by 1%. If anything it should be raise....

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(74)

Capricorn1

Jan-01-14 5:20 AM

To put this in perspective, if a service member retires from the service after 20 years at age 40, by the time he reaches 62 his pay will have been cut 22%. I wonder if this would be acceptable for all federal employees and members of Congress? While I agree that the DOD has plenty of room to tighten it's belt, they seem to go after those serving and have served first before reducing the waste in defense contracts which may effect their lobbyists and constituents back home. Or how about the hundreds of military bases overseas that have long worn out their usefulness except to bolster the economy of the host country. I'm waiting to see how this effects the retention of our all volunteer force.

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gavinf56

Jan-01-14 6:38 AM

The veteran would still only be receiving a 1% cut, Cap. It doesn't compound like that.

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Capricorn1

Jan-01-14 7:03 AM

Gavin, they receive a 1% cut each year from their COLA until the age of 62. It is not just a one time 1% cut. For example, an E-7 retiring this year with 20 years of service would see an average loss of over $3,700 per year by the time he or she reaches age 62.

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Capricorn1

Jan-01-14 7:06 AM

That is just an average loss, add those losses up over 22 years and its very significant.

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gavinf56

Jan-01-14 7:12 AM

Cap, understand where you are coming from, but if retirement pay currently is $10,000/year and the 1% cut is $100/year, over the 22 years the veteran would have received $220,000 and the cut would be $2,200 which is still 1%.

Somehow I am missing how it is compounded.

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Capricorn1

Jan-01-14 7:14 AM

Gavin, just found this on the military officer's association website. They did the math. An E-7 retiring this year with 20 years of service would see an average loss of over $3,700 per year by the time he/she reaches age 62 – overall impact: $83,000 loss by age 62.

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gavinf56

Jan-01-14 7:28 AM

OK Cap, got it, but it is a bit misleading. While it is a 1% cut per year, it is not a cut to retiree pay, it is a cut that "reduces working age retirees’ annual cost-of-living adjustment (COLA) by one percentage point until they reach the age of 62." making it a cut to future pay increases.

There is a catch-up clause that restores those annual 1% deductions once the retiree reaches 62 years of age.

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gavinf56

Jan-01-14 7:32 AM

The way I am reading this is that if the COLA was to be 2.1% this year, a veteran under the age of 62 would only get a 1.1% COLA.

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Capricorn1

Jan-01-14 7:34 AM

Gavin, Even though the bill includes a COLA “catch-up” clause at age 62 that recalculates the follow-on retiree’s annual pay base, the financial loss of the years between retirement and age 62 are permanently lost. I have no problem doing my part in helping to reduce the debt, but let's face it, this needs to be fair to everybody that works for the federal government. Giving up 80k of your military pension is a significant sacrifice to ask from so many that have already did their part and sacrificed in many ways.

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gavinf56

Jan-01-14 7:38 AM

Cap, I am not saying I agree or disagree. I was just trying to gets the facts so that I can make a reasonable and sound decision.

If I were to just take the letter writers information and face value, I would have been terribly misled.

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Capricorn1

Jan-01-14 7:41 AM

Gavin, you are correct but you have to add up all those 1% cuts each year to get the true picture. Just focusing on 1% doesn't give a true picture. Even members of congress were surprised at the impact after military advocate groups brought it to their attention. All they saw was the money it would save and the 1%. As a result they are going to revisit these cuts when Congress reconvenes.

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Capricorn1

Jan-01-14 7:47 AM

I understand Gavin, I just wanted to put it in perspective because you are right, the letter is vague and many people, even members of Congress, don't see the true impact this has over a 20 year period. If you're going to reduce COLA for some, then do it for all. We will have to see what Congress does this month now that there has been such an outcry and they have the true impact in front of them.

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mikekerstetter

Jan-01-14 7:50 AM

That's interesting. I thought when people said they were cutting military pensions they were talking about the actual pension part, not cutting down the percentage of COLA raises.

I agree with Gavin, if that's the case it's a bit misleading to say the pensions are being cut. It's like saying your social security is being cut because you only got a .5% COLA instead of a 1% COLA.

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Capricorn1

Jan-01-14 7:59 AM

So Mike, you are saying that cuts to the cost of living adjustment to keep up with inflation is not really a cut to their pension? You do know that an E7 that retired 20 years ago does not make anything close to what an E7 retiring today makes even with coat of living adjustments and even though they made the same sacrifices? We didn't do it to get rich, but we were promised a fair pension.

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Capricorn1

Jan-01-14 8:22 AM

I just find it sad that they choose to go after .2% of the population that chose to serve their country for 20+ years at a savings of 6 billion, when you have hundreds of billions of dollars being spent on social programs where almost half the country consumes them, and as a result of Obamacare it will be much more than half the country receiving some sort of government assistance.

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Ritty77

Jan-01-14 8:26 AM

It's a dang shame they can't find other places to cut, but the House Minority Leader said there are no more places to cut, so that's where we're at for another year, or more.

They'll raise the debt ceiling again in February. Maybe there really isn't a problem with too much debt. Time will tell.

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Premier

Jan-01-14 8:30 AM

Cap all the math is wrong from what you've stated from the web site. At your average of $3700 per year would mean a yearly retirement of around $366,000 and your figure of an $83,000 dollar lost over 22 years is a total package of 8.21 million dollars. For a Gunnery Sergeants pay?

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Capricorn1

Jan-01-14 8:31 AM

Well, Ritty many members of the House and Senate have said this will be their first order of business when they reconvene. We shall see.

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Premier

Jan-01-14 8:33 AM

I think someone added an extra zero in there and it should be $370 which would make it a $36,630 per year retirement. Sounds a little more down to earth.

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DeanWormer

Jan-01-14 8:34 AM

Typical people who claim to be Tea Party are against cuts when it affects them.

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Capricorn1

Jan-01-14 8:36 AM

Premier, I have not done the math but you can find the same information, along with graphs on several different reputable military websites. That was the problem, and the reason for the outcry, no one seemed to have actually done the math to see the true impact. All they were looking at was the small 1% each year. Now that it's been brought to the attention by military advocacy groups, Congress is having second thoughts.

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Capricorn1

Jan-01-14 8:39 AM

Worm, I never claimed to belong to the tea party. And yes it does effect me and .2% of the population and we have every reason to speak out. There are PLENTY of freeloaders that have done nothing for this country to find a 6 billion dollar savings.

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Capricorn1

Jan-01-14 8:42 AM

Première, see Budget Deal Includes COLA Cut -MOAA. That is just one of many sites.

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CMReeder

Jan-01-14 8:44 AM

Here we go again. We want cuts but not those cuts. You want less spending, you got it.

They finally passed a budget deal and one that lasts 2 years. After years of not having one and still there are going to be some who will not like it.

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CMReeder

Jan-01-14 8:46 AM

"There are PLENTY of freeloaders that have done nothing for this country to find a 6 billion dollar savings." -Capricorn1

Wow, so veterans are freeloaders.

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