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First Command Reports: Military Families Prefer Traditional Retirement Pension Over New Benefits

The First Command Financial Behaviors Index® reveals most career service members want to stick with current system

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FORT WORTH, Texas –Service members who expect to make a career out of the military prefer to stick with a traditional pension rather than opt for the newly-approved retirement reforms in the 2016 National Defense Authorization Act, reinforcing the value of guarantees in ensuring lifetime financial security.

The latest results of the First Command Financial Behaviors Index® reveal that 73 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) who say they are likely to serve to full retirement want to be grandfathered into the current retirement system.  These findings are consistent with monthly survey data collected since the Military Compensation and Retirement Modernization Commission announced its proposal last year to restructure the traditional 20-year retirement system as a blended program that includes a reduced pension in exchange for a lump sum bonus and a new 401(k)-type plan.

“Our career service members are understandably wary of giving up their traditional pension in favor of matching funds and other elements of defined contribution plans,” said Scott Spiker, CEO of First Command Financial Services, Inc. “Defined contribution plans have not worked for middle-class Americans in building a suitable income for retirement. There is no reason to believe they will work for our middle-class military force either.”

At the same time, many career military members have supported the idea of retirement reform for their non-career colleagues (that is, the people who would otherwise leave service without any government-sponsored retirement savings). In the September survey, 66 percent of respondents said they were in favor of the blended retirement system. When asked to explain why, those in favor of the new system said it will increase “the amount of people who would be eligible for benefits” and “provide more financial benefits” for service members.

“The traditional 20-year retirement system has been an important part of our nation’s commitment to ensuring lifetime retirement security for generations of our men and women in uniform,” Spiker said. “Service member families are sympathetic to the notion of offering new benefits to those who do not serve long enough to earn the traditional lifetime pension, even as they oppose changes that would reduce the size of their own pensions.”

About the First Command Financial Behaviors Index®

Compiled by Sentient Decision Science, Inc., the First Command Financial Behaviors Index® assesses trends among the American public's financial behaviors, attitudes and intentions through a monthly survey of approximately 530 U.S. consumers aged 25 to 70 with annual household incomes of at least $50,000. Results are reported quarterly. The margin of error is +/- 4.3 percent with a 95 percent level of confidence.

About Sentient Decision Science, Inc.

Sentient Decision Science was commissioned by First Command to compile the Financial Behaviors Index®. SDS is a behavioral science and consumer psychology consulting firm with special vertical expertise within the financial services industry. SDS specializes in advanced research methods and statistical analysis of behavioral and attitudinal data.

About First Command

First Command Financial Services and its subsidiaries, including First Command Bank and First Command Financial Planning, assist American families in their efforts to build wealth, reduce debt and pursue their lifetime financial goals and dreams—focusing on consumer behavior as the first and most powerful determinant of results. Through knowledgeable advice and coaching of the financial behaviors conducive to success, First Command Financial Advisors have built trustworthy, lasting relationships with hundreds of thousands of client families since 1958.


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