A previous blog introduced you to a new retirement system for military members. Now, there is more information on that system and how it will affect service members.
The Federal Retirement Thrift Investment Board, the agency that administers the Thrift Savings Plan, has been working with military services to train eligible service members on their options. The FRTIB proposed rule on September 11, 2017, gave more specific details about implementing the new blended retirement system (BRS) along with who is eligible and when they’ll receive their first contributions.
The new plan moves military members from a retirement relying on a vested defined benefit plan to one that includes a reduced benefit plan with greater TSP benefits, the continuation of pay, and come lump sum options.
The new BRS incorporates four major changes to the current military retirement system
First, employing military services will contribute 1 percent of service members monthly pay to their TSP account. These contributions are in addition to basic pay. The military services will continue to contribute whether members contribute on their own.
Second, service members will be automatically enrolled to contribute 3 percent of their basic pay. The program will re-enroll them annually if service members stop making contributions.
Third, military employers will match TSP contributions from their service members dollar for dollar for the first 3 percent of their basic pay and 50 cents on the dollar for the next 2 percent.
Fourth, the program will invest employee contributions in an age-appropriate lifecycle (L) fund rather than the government securities (G) fund—unless otherwise chosen by the member.
Two groups will be eligible to participate in this new system:
- Service members who enter the military on or after January 1, 2018
- Military members with 12 years of service or fewer who decide to opt into BRS
Individual services determine which military members are eligible. Reservists who have less than 4,320 retirement points before December 31, 2017, may also be eligible. (Click here to learn more about retirement points)
To learn more about this new system, click below.