Schumer Announces Passage of Legislation to Reserve Planned Cut of $6 Billion to Military Retirees' Pensions

Press Release

U.S. Senator Charles E. Schumer today announced the passage of the Military Retirement Pay Restoration bill in the Senate by a 95-3 vote, which will restore an impending cut to military retirees' pensions. The legislation passed the House of Representatives on Tuesday and will now head to the President's desk for signature. In the Bipartisan Budget Act, the cost-of-living (COLA) adjustment for military retirees' pensions was modified in a way that would have cut $6 billion-worth of benefits total for certain veterans across the country, starting in 2015. Schumer today voted in favor of the legislation that will prevent those cuts from happening.

"To cut military pensions for our veterans was very wrong. These veterans have risked their lives for us and we owe it to them to make their lives a little bit easier when they safely return. The good news is that the COLA cut has been reversed and veterans across New York State and the country can breathe a sigh of relief," said Senator Schumer.

Legislative Background on S. 25 Military Retirement Pay Restoration:

The Bipartisan Budget Act included a modification to the annual cost-of-living-adjustment (COLA) for working-age military retirees' pensions. Earning a military pension usually requires 20 years of service, allowing some service members to retire as young as 38 years old. The Budget agreement modified the annual COLA for military retirees under age 62 by making the adjustments equal to inflation minus 1 percent. As a result, once retirees reach age 62, their pensions would be recalculated to the level they would be at if they had always received a full COLA, and they would receive full COLAs equal to the traditional adjustment. The FY14 Omnibus restored full COLA adjustments for disabled military retirees and survivors.

S. 25, which passed the House of Representatives on February 11, would grandfather in and protect all current servicemembers and military retirees from the COLA adjustment. This legislation would instead make the COLA modification prospective to affect all servicemembers who join the military after January 1, 2014. CBO estimates the COLA restoration in S. 25 will cost approximately $6.8 billion over 10 years.

S. 25 would restore full retirement payments for up to 750,000 military retirees. Of the 1.94 million retirees that collected benefits in FY12, it has been estimated that 40%, or 750,000 will face a benefit cut unless action is taken to restore payments.

Enlisted retirees stand to reclaim thousands of dollars each year if their full COLA is restored. For an E-7 retiring this year with 20 years of service, the cut would result in an average action is taken, military retirees would see a significant reduction in their promised retirement benefits reduction of $3,700 per year. Lifetime retirement pay for enlisted personnel will be reduced from $1.73 million to $1.67 million for a 4% cut of $69,000. Lifetime retirement pay for officers would be reduced from $3.83 million to $3.74 million, for a 2.3% cut equal to $87,000.

S. 25 would protect retirement payments before cuts take place. The COLA modification included in the Bipartisan Budget Act is not slated to go into effect until December 1, 2015. This legislation, S. 25, would repeal the COLA adjustment before it ever goes into effect, thus restoring the full COLA benefits for all current servicemembers and military retirees.

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