Not ‘In For Life’? Let’s Talk Retirement Anyway

By Karen Parrish
DoD News, Defense Media Activity

The military retirement system, Defense Department experts tell me, has remained fairly consistent since the 1960s: You stay in 20 years or more, you leave with an annuity that can help support you for the rest of your life. You don’t stay in for 20 years? You don’t get the annuity.

That is about to change in a major way, thanks to a lot of effort on the part of a lot of people.

The 2016 National Defense Authorization Act outlined a new approach, dubbed BRS: Blended Retirement System. It goes into effect on January 1, 2018, and everyone who joins as of then, even if they don’t serve 20 years, has the potential to walk away after their term of service with some savings toward retirement.

DoD graphic

DoD graphic by Regina Ali

Who is Not Eligible?

BRS applies to active and reserve Army, Navy, Air Force and Marine Corps members, as well as the Coast Guard and members of the commissioned officers corps of the National Oceanic and Atmospheric Administration and the U.S. Public Health Service.

The new retirement system will cover everyone who joins on or after Jan. 1, 2018. Those already in service prior to that date will be grandfathered under the current retirement system. But even among those who are grandfathered, if they’ve served fewer than 12 years, or for reservists who have accrued fewer than 4,320 retirement points, they will get to choose to remain in the current retirement system or opt into the BRS.

Who Made This Change?

Congress enacted BRS following upon the recommendations of the congressionally mandated Military Compensation and Retirement Modernization Commission. The new system will extend new retirement savings options to the 81 percent of service members who historically have received no retirement benefit from the department.

The first round of BRS training starts June 1, and while it’s aimed at leaders, it wouldn’t hurt to take a look at Joint Knowledge Online or Military OneSource to glean a few details. More training is planned for the coming months.

Something for Everyone

The Thrift Savings Plan, similar to a 401(k), is the cornerstone of DoD civilian employees’ retirement plan. It has been an option for service members, but for them, unlike for civilians, there haven’t been any government matching funds. BRS changes that. Starting Jan. 1, 2018, everyone enrolled in BRS will receive 1 percent of their basic pay as a government contribution to their TSP account once they have served at least 60 days. They receive this regardless of what they contribute; but everyone enrolled in BRS will be automatically started at a 3 percent contribution from their pay. Those who have served two or more years will receive a government match of their contributions up to an additional 4 percent.

The “blending” in BRS comes from the combination of the Thrift Savings Plan and an annuity provision for those who retire after 20 or more years. BRS will use the annuity formula currently in place: the average of the service member’s highest 36 months of basic pay times 2.5 percent of his or her years of service — but the 2.5 percent is adjusted downward by half of a percentage point, from 2.5 to 2 percent. marines play money

No big deal? Not according to Army Sgt. Major Luther Thomas Jr., who has previewed the training as Senior Enlisted Advisor to the Assistant Secretary of Defense for Manpower and Reserve Affairs.

One of the great things about the new system is the inclusiveness, he said. “Under this new system,” Thomas said, “about 85 percent of those who serve … will be able to leave with some type of portable retirement system that they can take with them.”

Thomas talks enthusiastically about the program, though he cautions that those now in service should consider carefully whether to opt in. There are several variables, such as time in service, your personal situation, and your future plans that should factor into such a decision, he said.

Thomas said that between 2018 and 2021, BRS will save the department “about $4 billion, and a billion dollars a year every year in the steady state.”

Four-Phase Training

By the time the new system goes into effect Jan. 1, 2018, the DoD will have released four separate training modules, aimed respectively at leaders, financial counselors, the eligible opt-in population and new service members. Training will include scenarios, calculators and other tools aimed at helping members make informed and educated decisions.

The training “will help them compare the current retirement system to the [new] system,” Thomas said. It will be available via Military OneSource, Joint Knowledge Online and, at remote locations, on DVD. Family members are encouraged to view the training as well, Financial Readiness Chief Wayne Boswell said.

Most people will have access to information about that decision available from many other sources to include installation financial managers and counselors.

“The train-the-trainer [module is for] our professional financial managers and professional financial counselors and our retirement service officers,” Thomas said. “Those are the financial and retirement subject-matter experts on posts, camps and stations throughout the world.”

Boswell noted those experts are not meant to be in an advisory role, but rather to serve in an informative one. “The train the trainer course will really focus on scenario-based delivery of information,” he said. Experts will learn “how to talk about this in a meaningful way to service members and family members. And then when asked the question, ‘What do you think?’ they say, ‘It’s not my decision, it’s yours.’”

Thomas said, “I do believe it’s a win-win. I’m not eligible, but if I was, I’d have to consider it.”

Related Content: 5 Ways the Defense Budget Matters to You

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3 Responses to Not ‘In For Life’? Let’s Talk Retirement Anyway

  1. Eric says:

    So (having served 10 years active duty enlisted prior to the implementation of the BRS) if I separated now to earn my master’s degree, and then received a commission as an active duty officer after the BRS went into effect, would I be grandfathered into the old retirement system, or will I be enrolled in the new BRS?

    Having looked at the visual aid and the bill itself, it’s still unclear to me.

    • Mike says:

      I believe that you would be grandfathered. I don’t think that with your 10 years of active duty you would be considered a “new accession”. On the commander’s pocket guide it states that “new accessions” after 31 Dec 2017 will be automatically enrolled into BRS.

      Also, Zach is mistaken in his statement that you would lose the years already served. I know several Soldiers who had a break in service, and their pay after they returned to active duty did not start again with 0 years.

      I would also be very careful with entering the reserve, if you are considering selecting the BRS. If you accumulate too much time while in the reserves, you may end up being ineligible.

  2. Zach says:

    according to the old retirement system, if you were to get out to go to school, you would lose those as good years. If you re-enter service after Jan 1 2018, I would expect them to file you under the new BRS, since your prior service terminated.

    I would recommend switching to the reserves while attending school, so you can still collect good years towards retirement, while maintaining the option of the old retirement system.