Military Retirement System Being Overhauled, Big Changes Ahead

The military is revamping its military retirement system with the biggest changes to it since the end of World War II.

The new so-called “Blended Retirement System” (BRS) goes into effect on Jan. 1, 2018 and will affect many military members who have less than 12 years of service and those entering service from here on.

Under the legacy retirement system, military members receive no retirement benefits unless they serve for 20 years, at which point they get a pension that’s equal to 50% of their last pay.

The blended retirement system allows members to start saving immediately. The defined contribution portion allocates at least a 1% match to all military members’ Thrift Savings Plans, which can be increased to as much as 5%, similar to enrolling in a traditional 401(k) plan. To incentivize military members to stay in service longer, between eight and 12 years they get a special, one-time contribution bonus equal to 2.5% of their base pay.

The “catch,” as Meese called it, is that if 20 years of active service is completed, instead of getting a pension worth 50% of your highest 36 months of pay, you only get 40%.

“It’s actually the first entitlement reform that any part of our government has done,” Meese said.

Military members will be sorted into three categories: those who have no choice but to enter the new blended retirement system, those who have no choice but to remain in the legacy system and those who can opt into the new program.

All service members who enter the military on or after Jan. 1 will be automatically enrolled in the BRS. Individuals who have already departed the military or who have been in service for 12 years or more, will stay with the old system. But those who are currently on active duty, or in the reserves, having served less than 12 years, will have the choice of opting into the new program.

According to Meese, about 1.1 million members will have the option of enrolling in the new BRS. However, if members fail to opt-in, they will, by default, be left in the legacy system.

Does anyone find it amazing that whenever the government is looking to reform entitlements or threaten to stop payments during a possible government shutdown that military pay and retirement is the first thing mentioned? There wasn’t a mention about the bloated Congressional retirement entitlements and if they are to be amended as well. But we won’t be holding our breath waiting for that to happen.

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