Tuesday, November 20, 2012

Another Military Scandal

General William 'Kip' Ward
In the wake of the recent scandals surfacing around the sexual behavior of top-ranking military officers, another less lurid problem has largely gone unnoticed. 

A few days ago the Secretary of Defense demoted the head of the US Africa Command, General William 'Kip' Ward, from a four star to a three star general. Although this general was not fooling around with other women, he was apparently taking his wife along with him on expensive junkets and charging their lavish personal expenses to the military. There is no need to go into the spending details that amounted to over $80000 since the incident brought to light a much bigger problem.

Coinciding with his demotion, General Ward decided to retire but the demotion to three star status caused his military pension to drop from about $240000 per year to about $210000 per year. In other words, the general's pension dropped by $30000 per year, an amount equivalent to the maximum benefit an ordinary citizen can expect to receive from Social Security at normal retirement age.

In the Social Security system the benefit amount is limited by a cap on earnings qualifying for retirement benefits. If a citizen earns more than $100000 per year, Social Security is only designed   to provide a benefit based on actual earnings below $100000. Ordinary citizens earning over $100000 are rightfully expected to save on their own if they want a higher retirement income. Moreover, under Social Security retirement benefits are calculated based on a worker's average earnings over 30 years.

 These same rules do not apply to Federal employees like General Ward. Why should citizens be required to provide a pension benefit for the amount of Federal or government salaries over $100000 per year? Obviously, General Ward was making over $250000 per year in salary not to mention the other very substantial benefits and perks of his office. He could certainly have afforded to save for his retirement on his own.

Since his pension was based on only the last couple of years of his career, the amount required to adequately fund it is enormous.
It would take over $6000000 earning 4% interest to provide an income of $240000 per year. To keep it simple that means that if the General had served for 30 years, we would have had to kick in $200000 for each year of his career to provide a pension for him that most of us can only dream about.

General Ward and others like him in the government would have   very comfortable retirements even if their pensions were based on the average of their earnings over their whole career, and if they had supplemented with a 401k type plan. However, it would appear as if the general lived like a potentate during the last years of his career, and will even with his demotion continue to live like a potentate for the rest of his life.

If we multiply the General's situation by the millions of Federal, State, and Municipal employees throughout the land, we can understand why the Federal government is so deeply in debt, and why many states and cities are on the verge of bankruptcy. Governments are finding it impossible to fund these excessive pension benefits. Even sadder is the fact that the ordinary soldier in the General's command can hardly afford to maintain a family.

Is it any wonder that State and Municipal worker unions were the largest contributors to President Obama's re-election campaign?  ###

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