Joint Base Elmendorf-Richardson, Alaska -- The Department of Defense recently announced they will implement significant changes to the current military retirement system in 2018 with the introduction of its new plan, the Blended Retirement System.
“[The BRS] potentially allows more people to receive retirement benefits because when they complete their military service as compared to the current system,” said Doug Armon, 673d Force Support Squadron community readiness consultant. “Under the current system only about 19 percent of service members make it to 20 years. The [BRS] is designed to be a more portable retirement system, aligning us with the other retirement plans of today.”
All active duty, Reserve, and National Guard service members with either less than 12 years in the military, who joined after Jan. 1, 2006, or have less than 4,320 points toward their retirement before Dec. 31, 2017 are eligible to change their retirement plan to the BRS during 2018. All service members who join after Jan. 1, 2018 are automatically enrolled into this system.
It is a DoD requirement to receive training before making this decision. The Joint Base Elmendorf-Richardson Family Readiness Center has several financial advisors versed in the new system to help educate service members about their choices.
To elect the change, the service member must go through MyPay before 2019. The change is irrevocable. If a service member with the opportunity to switch plans does nothing, he will keep his current plan until retirement.
With the new retirement system, it is estimated that about 85 percent of service members will receive some sort of retirement benefit, even if they don’t qualify for full military retirement. If a service member joined after Jan. 1, 2018, contributes to the Thrift Savings Plan, and serves for two years, he could walk away with all the money he vested with matching contribution, according to militaryonesource.mil.
For service members under the BRS who hit 12 years of service, they may receive a cash payment if they opt to stay in for four more years, as a continuity pay. The payment will be between two and a half and thirteen months of basic pay for the active component member and half a month to three month’s basic pay for a reserve component member.
The BRS also calculates retirement after 20 years differently. The formula for retirement currently is 2.5 percent times years of service times the ‘high three’− the average of the highest 36 months of basic pay received, but the BRS reduces it to 2 percent. To make up for this cut, BRS provides matching contributions to the Thrift Savings Plan.
For more information and schedule an appointment, call 552-4943 or 384-1517.