Pentagon Eyes Huge Military Retirement Overhaul
Switching to 401(K)-style plan could save $250B
By Rob Quinn,  Newser Staff
Posted Aug 18, 2011 4:20 AM CDT
"About those pensions ..."   (AP Photo/Paul J. Richards Pool)

(Newser) – The Pentagon is considering a major overhaul of the military pension system that would save $250 billion over 20 years. Under the proposal, the system in which service members can retire after 20 years with half their salary would be replaced by a 401(K)-style plan, CBS reports. Service members would have to wait until standard retirement age to receive their pension, although the plan provides some benefits for people who serve less than 20 years—who walk away with nothing under the present system—and provides extra benefits for those who served in combat.

Defense Secretary Leon Panetta confirmed that the plan, created by an advisory board appointed by predecessor Robert Gates, is under consideration, reports TPM. He said retirement reforms need to be considered, but "you have to do it in a way that doesn't break faith with the military," and "you've got to think very seriously about grandfathering in order to protect the benefits that are there."