June 15th, 2021
I thank the DBCC for the wholehearted support for reforms to the Military and Uniformed Personnel (MUP) Pension System. Nothing is more authoritative, as far as fiscal sustainability is concerned, than a clear statement from the country’s fiscal managers that we need this reform urgently.
I also thank the DBCC for highlighting the urgency of the situation, and for clarifying the figures. As the DBCC reiterated, actual MUP pension spending has grown at an average rate of 12.3% from 2010 to 2019. This growth is too fast for our fiscal resources to accommodate without reform.
The situation could further be exacerbated by growth in MUP salaries. The DBCC is right to emphasize that maintaining automatic indexation of pensions to salaries of active personnel is also a significant threat to the sustainability of the pension system. As the DBCC reiterated, MUP salaries have grown at an average of 19.63% from 2008 to 2019.
We are between a rock and a hard place with this situation. On the one hand, we want to recognize the difficulties of being an MUP. On the other hand, we don’t want to lie to them and say that we can always afford the current pension system. The simple fact of the matter is, at current levels and growth rates, this situation will explode in the future. I will not be able to stomach doing nothing now, as the threat in the future is real that we may be unable to pay pensions or raise salaries someday unless we enact urgent reforms.
The House leadership is committed to getting a version of this reform approved. This much is clear with the Speaker’s decision to create a supercommittee of House leaders to tackle this measure.
The choice is between some pain now, or plenty of pain in the future. The DBCC statement today makes that clear.