Rand says otherwise, although past attempts to change the military retirement compensation system have drawn the ire of servicemen and women who served 20 years or more — long enough to draw benefits — and then planned both their post-military careers and the rest of their lives around the promises made upon enlistment. 

Still, many agree the current system is by no means perfect. The fact that service members must serve at least 20 years to draw benefits is one requirement that compares poorly with the private sector, in which vesting in DC plans occurs after as few as three years. As things now stand, only 34 percent of officers and 14 percent of enlisted service members stay in the military long enough to collect retirement benefits. 

The study was conducted as part of a 2011 DOD-ordered review of the military's retirement system.

Rand, a nonprofit research organization, worked closely with the group assigned to tackle the review and assessed a number of proposals before settling on two broad concept designs.

The Rand study identified the main criticisms leveled at the current system as inflexibility, inefficiency, and inequitability.

The inflexibility lies in a one-size-fits-all approach, which means that regardless of rating or specialization, every service member within a certain pay grade will receive the same financial compensation "despite differences in training costs and productivity and the value of experience, knowledge, and skills." 

Of course, in some cases this aids with retention, but in others it means that officers and others in fields where training costs are higher and experience is of greater value may seek work in a higher-paying civilian job. 

On the flip side, the dependability of a known retirement benefit has aided retention and its immediacy – retired service members can begin to collect retirement benefits as soon as they leave the armed forces – means that retirees have financial support to count on as they re-enter the civilian workforce. 

Elsewhere, according to Rand study, the current system is "inefficient because it places too much compensation in the form of deferred payments, despite the fact that the typical service member is young and would prefer to receive higher pay as they serve, rather than a higher annuity once they complete 20 years of service. As a result, compensation costs are higher than necessary." 

The Rand study favors a hybrid plan, to include features of a DB and a DC approach, as well as payment of retention incentives midcareer and "transition pay at separation to sustain the size and experience mix of the military force."

The two design concepts it proposes in its report differ mostly in how the defined-benefit component is structured. 

Both plans would set vesting at 20 years for the DB portion of the plan. 

But under Rand's so-called Concept I, the first of the two versions it offers, a two-tier retirement plan would provide an immediate and lower benefit to personnel during their "second-career" years. The full payout would not begin until service members were in their 60s. 

Concept II provides only one tier of benefits, but the multiplier would be less than today's 2.5.  

Both plans would offer two types of supplemental pay, transition pay and continuation pay — though they would calculate them differently — with the purpose of sustaining "the size and experience mix of the force in the context of the decrease in the defined benefit."

Transition pay would be a multiple of final annual pay, available to active duty members who retire with at least 20 years of service. Continuation pay would be a multiple of monthly basic pay and targeted to specific years of service to sustain retention. 

Both plans also include a DC component in the form of the government's Thrift Savings Plan. The government would automatically contribute a percentage of base pay to these accounts annually; members would be able to choose whether to contribute any additional funds to these accounts.

They would vest after six years and be able to start taking payouts at age 59½; they could also manage their accounts and asset allocation, and when leaving the military after six years of service they would be vested.

The Military Compensation and Retirement Modernization Commission, established by Congress, is considering the Rand and other studies and is expected to release recommendations on changes to the system in February.