President Barack Obama vetoed a fiscal year 2016 defense spending bill that included reforms to the military retirement system.
Announcing the veto Thursday, Mr. Obama said in a statement that despite “positive changes to the military retirement system” and other reforms in the $612 billion bill, “it fails to authorize funding for our national defense in a fiscally responsible manner.”
The annual defense authorization bill sets policies and spending levels for the military, but funding has to come from a defense appropriations bill that has been held up in disagreements between the White House and Congress on federal spending caps. Mr. Obama said the defense bill, which avoids those caps, “relies on an irresponsible budget gimmick.”
The defense spending bill, approved by the House and Senate earlier this month, incorporates some of the recommendations made in a Jan. 29 report by the Military Compensation and Retirement Modernization Commission to address an estimated 83% of service members who do not meet the military's 20-year vesting limit for the defined benefit system. The bill calls for a 20% cut in benefits for service members staying 20 or more years, to pay for Department of Defense contributions to the $443.3 Thrift Savings Plan on behalf of new service members who must also contribute. Existing members could also contribute to the TSP with matching contributions. The new system would be mandatory for new people enlisting after Jan. 1, 2018. It would also allow members with 12 years of service to take a lump-sum payment upon separation.
Retired Navy Vice Admiral Norb Ryan, who is president of the Military Officers Association of America, said in a statement that the bill will harm morale and military readiness. “Slashing military retirement pay by 20% may erode career retention and only provide a greater incentive for members to leave service early. While we support government matching of personal Thrift Savings Plan accounts, it should not come at the expense of cutting military retirement,” Mr. Ryan said.