A Preliminary System Dynamics Investigation of Alternative Military Retirement Programs.
AIR FORCE INST OF TECH WRIGHT-PATTERSON AFB OHIO SCHOOL OF ENGINEERING
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Numerous proposals for restructuring the military retirement system have been prompted by increasing concern over the growth of personnel costs. In particular, the Retirement Modernization Act, now before Congress, has generated a considerable amount of controversy over its provisions for reducing the size of benefits for 20 year retirees. When future costs are used as a measure of effectiveness for alternative retirement programs, a problem arises because of the interactions between the retirement system and the personnel system. Changes in retirement benefits can induce significant changes in retention patterns, with serious cost implications. This report develops a dynamic model of the Air Force officer personnel system suitable for analyzing the long range effects of alternative retirement programs. The cost impacts of hypothesized changes in retention indicate that any savings in retirement costs may not be large enough to effect a net reduction in total system costs. Furthermore, if unanticipated changes in retention in the lower grades should develop, the increased turnover costs could completely swamp any savings in retirement costs. Author
- Personnel Management and Labor Relations