Department of Defense Press Briefing on the Blended Retirement System by Performing the Duties of Under Secretary Kurta in the Pentagon Briefing Room

Anthony Kurta, performing the duties of under secretary of defense for personnel and readiness; Wayne Boswell, director of financial readiness at the Department of Defense; Jeri Busch, director of military compensation policy at the Department of Defense

CAPTAIN JEFF DAVIS:  We're pleased to be joined today by some folks who are here to discuss the blended retirement system and specifically the opt-in training. This is something that new military members will be going through and it's a very important thing for us to be able to get this information out so that our men and women in uniform can make informed choices as they move forward with this.

We have with us today Tony Kurta, he's currently performing the duties of the undersecretary of Defense for personnel and readiness; Ms. Jeri Busch, who's the director of military compensation policy; and Mr. Wayne Boswell, who's the director of -- for financial readiness.  And I will turn it over to them.

MR. ANTHONY KURTA:  Well, thank you and good afternoon.  Appreciate you joining us today so we can talk about the blended retirement system and some of our financial education that goes along with that.

Very exciting for us as we get near the implementation of the new blended retirement system to talk and share with you some details about the policies that we've been working very hard on over the past 18 months and -- and accompanying online training course, which was actually just launched yesterday.

As -- as Captain Davis said, joining me today is -- is Mr. Wayne Boswell, who's the director of financial readiness, and Ms. Jeri Busch here, the director of military compensation policy.  We've all been working this very hard over the last 18 months.

I'd like to start off with just a couple of comments about the policy and our training curriculum and then Ms. Busch and Mr. Boswell will add a couple of comments and we'll go onto any questions that you have.

First, a little bit of a background about the -- the blended retirement system.  I -- I -- I don't think it's an exaggeration to say it's one of the most significant changes to military pay and benefits that we've had over the past 70 years.  We'll now be able to offer to 85 percent of our force a portable government retirement savings while still maintaining a tradition pension for those that serve at least 20 years.

We view this as a key step in modernizing our ability to recruit, retain and maintain the talent we need for our future force.  It also brings us in line with similar private sector retirement plans and it certainly provides more options for our service members.  As you know, it goes into effect on January 1, 2018, which is only about 11 months away.  

So on the policy side, we've made significant progress over the past several months to the point where Deputy Secretary of Defense Work signed the implementation policy guidance last Friday.  That policy establishes the framework and the procedures for implementing the new retirement system.  It lays out the eligibility criteria.  It lays out the opt-in procedures.  It talks about the training requirements.  And it outlines the responsibilities of each of our military services as they administer the new blended retirement system.

Additionally, it provides some greater detail on certain aspects of the new retirement system, specifically how to calculate that defined benefit, eligibility for continuation pay, and how the lump sum will be calculated and paid to service members.  The lump sum remains a very, very complicated part of the new system.

We committed when this blended retirement system came into -- came into being to accompany it with a very robust system of financial education.  Obviously, the services have very robust financial education, but we realized we needed an accompanying financial education plan that focused specifically on the blended retirement system, and in particular as we're talking about today, targeted toward those who are going to opt-in or have the ability to opt into the new system.

We committed -- OSD committed, the service chiefs committed, to upping our financial education plans and it's certainly a central tenet for us to be able to implement the blended retirement system next January.

Our education policy is designed to educate both our active, our National Guard and our reserve component members and their families, in order to make the most educated decision they can as to whether they will opt into the blended retirement system.  So to do that, we released a leader course for our military leaders back in June.  And to date, about 120,000 leaders have enrolled and taken that course.  Back in October, we implemented a course to prepare our financial managers and counselors, and we launched the personal financial counselors and educators course.

And over the past six months, we've had 22 speaking engagements; 18 webinars -- one in Guam, one in east Asia; numerous Facebook Q&A sessions; Twitter chats -- all for those early adopters who are seeking more information on the blended retirement system.

And then as I mentioned yesterday, we launched the third of our four courses in our training series, the opt-in course.  It's called the blended retirement system opt-in course.  It will aid our eligible service members, again active, reserve and guard, in understanding and comparing the legacy retirement system and the new blended retirement system.

We hope that our service members will use the knowledge gained from this course.  They'll combine it with their personal assessments of their career goals, their own financial situations.  And then decide with their families which retirement system is best for them. 

All of our courses are available on JKO -- Joint Knowledge Online.  But we've also made them available on Military OneSource, so there's no need for a government computer ID card.  That's meant to enhance the access for our reserve, guard and our -- or our reserve component and National Guard members, and also so that our members can take these courses with their families.

We certainly recognize it's very seldom an individual decision, whether to opt into the blended retirement system, but mostly always a family decision.  For those that are in remote sites or have very limited internet connectivity, the courses are also available in DVD form.

And then lastly, before I turn it over to Jeri and Wayne for their comments, one other tool that we provided, or will provide, to our service members so they can compare the two courses, is an online calculator.  And in this calculator -- it's an official DOD calculator.  So we've gone and -- and created all of the calculations and verified that all of the material represented from the calculator is accurate.  A very comprehensive tool, and our service members can be confident in using that tool that compares the two retirement systems, that they are getting correct information.

We know that there are other organizations that are developing their own calculators or online tools that certainly our service members can use.  But this is the -- this is the tool we want people to take advantage of because it's an official DOD tool.  We've checked the calculations.  We know they're correct.  We cannot vouch for any of the other tools as to the correctness or the accuracy of the information that they present.

With the calculator, our service members from active, reserve and the guard can enter in information about their own career paths, their future career goals, and then utilize the results of the calculator to aid in their decision of which retirement system best meets their needs.  It will give them an individual solution and an individual calculation.  And we are on the last phase of programming that calculator.  And it should be released here in the very near future.

With that, I'll step aside and allow Ms. Busch and Mr. Boswell to make some comments.

MS. JERI BUSCH:  Thank you, Mr. Kurta.

I'd just like to emphasize a couple of points, if I may.  First, I'd like to point out that the blended retirement system truly is a blend.  It's still predominantly a defined benefit plan, but it does add a defined contribution component known as TSP or the thrift savings plan.  And that will provide our members automatic and government contributions to a service member's retirement account.

This allows early vesting, and particularly for our service members who don't plan on doing a full 20-year career, it provides a portable government retirement savings for them.  

I'd also like to point out that anyone who is currently serving or serving as of 31 December 2017 will be grandfathered under our legacy retirement system, but active component members with fewer than 12 years of service as of December 31, 2017 and reserve component, guard and reserve service members who have accrued fewer than 4,320 retirement points as of that date, and who are in a paid status when they make their decision, will have the option to opt into the blended retirement system.

Now, there's no single right answer for any service member, we recognize that, as to which retirement system is better.  And the department does not take a position on that decision.  It is best made by our service members with their families.  

But we recognize and we are actively working to ensure that they have all the information they need to make the best decision for them on an individual basis based on their individual circumstances.

Both the legacy retirement system and the blended retirement system have advantages and disadvantages.  And again, we hope that our service members will make the decision that's best for them, given their individual circumstances.  I encourage service members to take advantage of every opportunity to become educated about the blended retirement system, to use the tools we'll make available to them and the resources we make available to them in order to make the best decision for themselves and their families.

And one last point I'd like to make about the grandfathering is that no one will be automatically moved into the blended retirement system.  It truly is an individual's decision to opt in for our service members.  Thank you. 

MR. WAYNE BOSWELL:  Thank you.  Thanks for providing the opportunity to emphasize a couple points.

I think yesterday was a great day for DOD and our service members and our family members.  We've been working really hard to give them the tools that they need to make an informed decision on whether to opt into the blended retirement system.  

Top-quality curriculum doesn't happen, as we all know, by itself, and so we were very careful to bring in subject matter experts, curriculum experts from the services, bring in stakeholders from our communities, but I think most importantly, bring in service members who helped us take a look at our processes in developing this curriculum, giving us feedback to make sure that whatever we developed was in their best interests, could meet their needs, and so they had the tools that they needed to make this critical decision.

Because more than 75 percent of our -- of our family members live off the installation, we've also worked very hard with our stakeholders to make sure that our -- our on-base banks, our credit unions, other stakeholders in our communities are aware and have access to all the tools we've developed because as our family members -- as I said, over -- more than 75 percent live off base.  

Sometimes, they're gonna go to those community stakeholders for information on the BRS, and so we've made sure that we've doubled down to make sure that all of our community stakeholders have all the information that we've developed over the past year and will also have access -- direct access to this -- to this course as well so that when our service members and family members have questions, there can be a force multiplier for DOD in our communities to help our service members get all the information that they need to make this very important decision as the go forward.

The launch of the course doesn't stop yesterday.  We are gonna continually receive feedback from service members.  This is an important time for us and it's important that we listen to our service members and family members as they take this course.  And so we're gonna continually be listening to them based on feedback that they provide to us to again make this the best possible course we can make it for our service members as they make this important decision.  And then in the coming months, we'll start working on -- the accessions course that will go in place in January of 2018. 

I can tell you that as of the launch of the course yesterday, over 1,000 service members have enrolled in the course, which I think is great news and shows us that our service members are very hungry for this information and they want to take an initial look at this -- at this course and -- and the information -- (inaudible) -- provided for them so they can start really working this, discussing it with their family members and getting all the information they need to make sure they're prepared to take the -- make the decision as they go forward. 

Thank you.  Sir, back to you.

MR. KURTA:  At this point, if anybody has any questions, we're certainly -- love to hear them.


Q:  Hi.  It's Jared Serbu from Federal News Radio.

MR. KURTA:  Hi -- (inaudible).

Q:  One of the concerns that the service chiefs expressed in testimony last year was that in order to get an equivalent amount of retirement savings under BRS, you would essentially have to do in the very early stages of your career max out the government TSP match at a time in your career when you probably don't have a lot of disposable income. 

So, I guess my question is, are you affirmatively urging people who do opt in to invest as much as possible in those early stages?

MR. KURTA:  Well, in short, the answer to that question is yes.  I mean, obviously, if you're going -- if, you know, we have highlighted the fact that it's an individual decision.  Right?  And everybody has different financial needs; different financial goals; and their situation is different.

However, if you're going to opt into the new blended retirement system, you obviously can maximize your benefits the earlier and the more you put in.  Right?  So the earlier you -- you know, if you have that decision, obviously you can start the matching contributions the earliest if you opt in in January -- (inaudible) -- next December of 2018.

You also, if you make the maximum contributions, five percent of your pay, even though we're going to auto-enroll everybody at the three percent, but if you have the ability to -- to contribute to five percent and get the matching funds, you know, save early and often, you know, over the course of your career, you will be significantly better off than you would have been under -- under -- you have the opportunity to be significantly better off than you were under the legacy system.

So, yes, I would encourage for those who determine that the blended retirement system is their preferred retirement system, we would urge them to put as much of their income as they can into the TSP, certainly the amount that the government will match.  You wouldn't want them to leave any money on the table.

Q:  (inaudible) -- come to any projections about what you expect the opt-in rate to be?  And does it have financial implications for the department one way or the other depending on how many people you get in one system versus the other?

MR. KURTA:  Well, I will -- I will tell you this.  You know, there's a lot of models and predictors out there that try to predict human behavior.  And being in the personnel world, I've seen them throughout the years.  And all I know is every -- every prediction I've ever heard has been wrong.  You know, it's never exactly quite right.  So, predicting human behavior is -- is always tough.  

So I would say that, sure, we have -- we have models that have run -- (inaudible).  I don't know how they will end up matching reality.  But this is -- this is what I would say.  As Ms. Busch said, we do not take a position in the department as to whether somebody should opt in or not.  We have committed to giving them all the tools, the time, the resources to make the best decision they can, that meets their individual needs, their family needs, and their own financial decision.

And then, you know, make those decisions and we'll adapt.

Yes, ma'am?

Q:  (inaudible) -- good afternoon.

MR. KURTA:  Good afternoon.

Q:  I am Kanwal Abidi, I belong to Metro 1 News.  I'm a foreign journalist. 

Okay.  My question to you is when a new service member joins the military, so do you set up a -- (inaudible) -- fund against -- (inaudible)?  And if yes, do you -- (inaudible) -- the retirement plan?  Or will you pay it off in cash on retirement?

MR. KURTA:  (inaudible) -- does that -- I'm not -- I'm not understanding the -- the actual question -- the provident fund.

Q:  (inaudible) -- a new service member joins --

MR. KURTA:  Right.  Yes.

Q:  -- so he's working.  And in his salary, do you set up a provident fund?  If you do, my question is:  Do you -- (inaudible) -- provident fund in the retirement plan?  Or when he retires, you pay it off in cash?

MS. BUSCH:  So -- so, I think the best way to answer that question is to just tell you that under the blended retirement system, a new recruit who comes in as of 1 January 2018 or later, will be automatically enrolled in the thrift savings plan at a three percent contribution rate.  That's three percent of basic pay. 

The government will automatically contribute, or the Department of Defense will automatically contribute one percent and will match the three percent, up to five percent matching.  Right?

In addition, every member who comes in now or then is under our -- the defined benefit portion of the retirement plan.  But in order to qualify for that, they would have to serve for at least 20 years.

Q:  Is this a defined benefit plan -- (inaudible)?

MS. BUSCH:  It's a defined annuity.  It's a monthly retired pay for anyone who achieves 20 years of service.

Q:  It is in compliance with -- (inaudible) -- like the -- (inaudible) -- have -- (inaudible) -- rules?  So this -- (inaudible) -- international accounting standards -- (inaudible)?

MS. BUSCH:  So, all of this, whether it's the blended retirement, the thrift savings plan, or the defined benefit, is all governed by U.S. law.

Q:  And my other question -- (inaudible) -- spoke about the leader course -- 120,000 people.  So how long -- what's the duration of that course?  And secondly, can a -- (inaudible) -- counsel -- (inaudible) – service member?

MR. KURTA:  Well, I -- Wayne can talk to specifics of the length of the leader course.  But as we laid out our financial strategy, we knew that once the law was passed, our service members were going to have a lot of questions about the new retirement system.  

So the first thing we said is, okay, we need to educate our leaders so that particularly our junior service members that are going to have the ability to opt into the new course, we want them to go to their chain of command to get information about the blended retirement system.

So we -- we implemented that course back in June.  And as we said, about 120,000 leaders have taken that course, so they can discuss it with the junior members of the force that have -- have the ability or have the option to -- to choose the new retirement system.

And Wayne, if you want to say anything more about that leader course?

MR. BOSWELL:  Yes.  Just I think the intention was to get a shorter course that had more headline approach to the information, to get an initial understanding of the course, so it wasn't as personalized for folks that have to make decisions based on their circumstances.  

And the course takes anywhere from 30 to 60 minutes.  And it was a new approach for DOD.  We developed a newspaper version of the course.  So that service members -- it wasn't linear -- so service members could go in and select, or leaders could go in and select individual sections or modules in the course to get information.  And we set it up that way so that if they got questions from their service members, they could go in and actually go into that module, be able to get the information, and be able to directly answer the service member's question.

Q:  Online?

MR. KURTA:  Yes, online.

Yes, ma'am?

Q:  Related to the question about the percentages that they contribute to their TSP and the effect on their retirement.  In the BRS calculator, will they be able to go in and plug-in different percentages --

MR. KURTA:  Yes.

Q:  -- from the -- to see how from the get-go that will make a difference to their -- what they -- what they accumulate?

MR. KURTA:  Yes.  Yes.

Q:  And when do you expect to be -- I know you said soon, but when do you expect to the V.R.'s calculator?

MR. KURTA:  In the coming weeks -- not several months, but a number of weeks.  We really are in the final stages of ensuring that all of the calculations are correct.  That turns out to be, you know, technically be the -- be the hardest part of this.  We had to wait until we had all of the policy signed, right?  Particularly how we're going to do a lump sum.  And then make sure that the calculator reflects all of the policy changes.

So even though we've been working on the calculator for a long time, we had to do some -- some -- still quite a bit of -- of building of the -- of the calculator to (inaudible) once we got the -- the signed policy from the deputy, if that make sense. 

Q:  And in terms of this course, long does it take the service member to go through all the lessons?  I know you -- I know they can pause it and come back to it.

MR. KURTA:  I think we've learned that this -- this -- this course takes between two, two and a half hours?

STAFF:  It's actually about an hour and a half to two hours.  And we're actually -- the department's currently looking at options so that we would enable the service member to test out of certain portions of the course based on the amount of information we've already pushed out to service members and leaders out in the field.  But currently, the course would take about an hour and a half to two hours.

Q:  And if they're in this -- this opt-in eligible group and they -- they have 12 years or less as of this December and they decide that they don't want to opt in, are they still required to go through the course?  If they don't -- if they know they want to stay with the old system, are they still required --

MR. KURTA:  No, I mean -- and correct me if I'm wrong, but what we have required is we have required -- the services require anybody that opts into the -- into the new system to have completed the training.  If the service member does nothing, they remain under the legacy system and they don't -- they don't have to take the course in order not to do anything, if that makes sense, right?

Right?  It's affirmative action to -- to -- to opt into the new retirement system, but everybody has to have a certificate of completion that you've completed that course as a minimum before we allow you to opt in.


Q:  Do you guys have any legislative proposals pending right now to modify BRS in any way?  I know there's been talk in the past about things like extending the government match up to 30 years and more flexibility in the continuation pay.  Anything like that come up that you would like to see changes?

MR. KURTA:  We -- we -- we had some proposals over on the Hill last year that -- you know, some were incorporated in the NDAA, some were not.  But we're still developing -- you know, we haven't decided legislative proposals for the next cycle. 

Q:  What were the main things that came up in that policy development process that you mentioned?  Can you -- can you give us some flavor of the biggest issues that you had to tackle -- (inaudible)?

MR. KURTA:  The -- the biggest issue was -- was -- was flexibility in the continuation pay, mostly in terms of how much you pay and at the points of which it is paid.  

And the Congress gave us some -- some flexibility on that because it's going to -- in the end, the continuation pay was developed to be a tool from the services, you know, at that mid-career point to kind of pull people up to that 12 year point and -- (inaudible) -- pay them a certain amount of money in exchange for four years of continued service and kind of to push them towards that twenty-year point where that defined benefit pulls them the rest of the way through.

And we realize that for different skill sets, different services, officer enlisted -- officer versus enlisted, active versus reserve, you know, the amount that you need to pay somebody to get the behavior you want is going to be different.  Again, we've got models that say, you know, a number of things.  So we'll see in the end what it is. 

So we -- you know, we had asked Congress for as much flexibility as we could have on that.  We're confident that what we -- what we currently have, the tools that they gave us are -- are sufficient with what we know now to recruit and retain exactly the -- the quality and quantity of folks that we need.

Q:  So just to be clear, it was a rigid 12 years originally --


MR. KURTA:  It was originally.  Now I think it's eight to 12?

MS. BUSCH:  It's eight -- yes, that's correct. 

MR. KURTA:  Yes.  Right.  

Q:  (inaudible) -- use that however they want?

MR. KURTA:  Yes, right, right.  They can determine where in that -- between that eight and 12 years they decide to offer that continuation pay.  

Q:  Okay.  How many -- (inaudible) -- counselors you have?

MR. KURTA:  Okay.

MR. BOSWELL:  Well, at the installation level, we have approximately 300 -- at the installation level.  But we've augmented that with another 500 that can be deployed based on the service's needs at installations.  And as I've said, we're also training all of our stakeholders so that they can be part of that cadre of folks that are informing and working with their service members and family members. 

So we've worked the last year to really understand what the services need, where they need it, based on the service member and family member needs, and then pushing that out so that that is in place today.

Q:  (inaudible) -- employees or permanent employees with the DOD?

MR. BOSWELL:  We have a mixture of both.

Q:  And my last question, what was the -- (inaudible)?  I mean, I just want -- I'm just trying to visualize, like, on a daily basis, one person counselor -- (inaudible) -- how many service members will he talk to?  (inaudible) -- just for my understanding -- (inaudible).

MR. BOSWELL:  I would say it's hard to forecast because we're very early in the initial stages of the rollout of the BRS.  But what we are doing is we're managing through the services those assets so that they have more time to provide counseling support for our service members and family members.  

And so what we're doing is we're working to get them out of the classroom with normal financial management classes that they would provide, so that they can get them more into the counseling lane, and then have other contracted resources in place to be able to provide that ongoing financial readiness training separate from the BRS.

Q:  Do you know how many financial counselors have gone through the VRS course or the -- (inaudible)?

MR. BOSWELL:  It's been mandatory for all those -- all those individuals I just talked about, for both the counselor -- both the governmental employee and the contractor.  It's been mandatory for them all to go through the course.  And we are -- we are managing that via JKO, so they get access to JKO to take the course -- (inaudible).  Because we wanted to make sure that whatever we launch, whether it be the leader course or the course tailored for them that we launched in October, or the VRS course, opt-in course, that they have access to all those materials.

Because we envision a service member coming in and sitting down with them, and may want to go through some of that material with them live online as maybe they're taking the course, or into the calculator, those things.  So it's an adaptive tool for our counseling -- our counselors to use with their service members.

Q:  (inaudible) -- if it's not classified?

MR. BOSWELL:  So, I think -- I think public affairs is pushing that link out to everybody.  It's non-CAC enabled, so you would actually have access to the opt-in course.  But it's also available on Military OneSource if anybody here has access to Military OneSource as well.  We'll definitely push that up into the P.A. lanes to make sure you have that.  

MR. KURTA:  Well, thank you for your time and your interest in this subject.  It's very important for our service members to get this right.

Appreciate it.