Deadline Approaching to Opt in to Blended Retirement System
Service members have just one month left to make a decision about opting in to the blended retirement system, Jeri Busch, the Defense Department’s director of military compensation policy, said here today.
Congress authorized the new system in 2016 and it went into effect on Jan. 1. While all soldiers, sailors, airmen, Marines and Coast Guardsmen who began service after that date are enrolled in the new system, Congress gave serving service members until Dec. 31 to decide whether to opt in.
The decision to opt in to the new system is a personal one for service members. DOD has no goal or target level of participation. One major difference is that in the new system, service members are vested after two years’ service, so if they get out of the military, their retirement benefits go with them.
“Over 80 percent of our service members will not serve a full 20-year military career,” Busch said. “However, through BRS and by maximizing their [Thrift Savings Plan] contributions, today’s service members can receive a government retirement benefit whether they serve four, 14 or 20 years – a big change to what has historically been a part of military retirement.”
Another difference between the blended retirement system and the legacy system is that BRS adjusts the years-of-service multiplier from 2.5 percent to 2.0 percent for calculating monthly retired pay.
The “blend” is the combination of automatic government contributions of 1 percent of basic pay and government matching contributions of up to an additional 4 percent of basic pay to a service member’s TSP account.
Well-Informed, Educated Choice
“It is a highly personal choice to opt in to BRS, and there are many factors that can effect a member’s decision,” Busch said. “The department’s goal is to ensure that each eligible service member has the resources and tools to make a well-informed and educated choice best for them and their families.”
More than 300,000 active, reserve and National Guard service members have opted in to BRS, Busch said. For those who have yet to make a choice, “time is fleeting,” she said. “There are a number of resources our service members can access free, to ensure they are receiving creditable and factual information on their retirement choice.”
Each installation has a personal financial manager that service members can contact. There is also a handy site at https://militarypay.defense.gov/BlendedRetirement/. The site includes a calculator that service members can use to plug in their information and compare the two systems. Military OneSource is also available 24 hours a day to service members and their families as they face this crucial decision.
“Most junior service members may think they can’t afford to contribute to retirement, but I say in today’s environment the average worker – including our service members – can’t afford not to save for retirement,” Busch said.
For some service members opting into BRS is clearly the right choice for them, she said. For others, staying with the legacy system is the best choice. “We have strived to ensure all eligible service members are educated on the various elements of BRS, informed on the process for how to opt in, and aware of training and counselling resources and tools available,” she said.
DOD has “stress-tested” the site that allows service members to sign up for the new system, Busch said, and even if tens of thousands wait until Dec. 31 to opt in, there is still the capacity to accommodate them.