Blended Retirement System Explained - January 1, 2018 Unified Services National Defense and Reserve Members and Their Families Hybrid Retirement System Overview MIKE: Andy and I would like to thank the Department of Defense and everyone for hosting this webinar for National Retirement Week. agree with you The introduction of the Hybrid Retirement System (which Andy and I will occasionally refer to as the BRS) is the most qualitative and significant change to military pay and benefits since the late 1940s. We are working to implement these changes, train the workforce in the new pension system and manage many system changes. Before we begin, let me stop and introduce Andy to you all. Andy is a military compensation assistant in the Secretary of Defense's Office of Personnel and Readiness. He oversees military retirees and pensions and is the project leader for the department's new hybrid retirement system. In addition to his civilian career with the DoD, Andy is a surface warfare officer in the Marine Corps. Andy: Thanks for the insight. Let me introduce you all to Mike. Mike D.C. Chief of the Air Force Base, we brought him back in June to serve as assistant chief of military compensation for strategic communications. He's an excellent public affairs officer and brings a great perspective as a custodian - he's represented you all well. Mike: Okay. With that introduction out of the way, today we'll discuss a few features of BRS as well as our efforts to implement the new system. October 18-19, 2016 Retirement Week October 16-22, 2016 National Workforce and Readiness Week
The Legacy Retirement System is a defined benefit pension plan with at least 20 years of service to the Blended Retirement System, Blended: 2.5% X Members' TSP Contribution DoD Automatic 1% TSP up to 4% of DoD eligible monthly retirement pay. 14% Reserve and 19% Active Qualifying MIKE: Let's start by comparing the two pension systems. The current system, we call it the legacy pension system and the new hybrid pension system. Andy: The Legacy Retirement System in the Legacy Retirement System, we often call it the "Top 3 System" because retired pay is based on the average of the highest three years of pay for service members who complete at least 20 years of service. . Active military service monthly retirement pay (ie defined annuity). A retired serviceman receives a monthly pension based on years of service and a percentage of service members' pay. The formula above shows how we arrive at this amount. Their years of service are multiplied by 2.5% to determine the percentage. However, today only 19% of active duty members are eligible for monthly retirement pay, and only 14% of our reserve and defense population. This means that approximately 81% of active duty service members and 86% of reservists will leave the military without receiving a pension. Hybrid Retirement System: The new hybrid retirement system combines a legacy 20-year military retirement system (defined benefit pension) with a defined contribution plan called a Thrift Savings Plan, or TSP. A defined component or TSP includes an automatic 1% DoD contribution after 60 days and an additional matching contribution to the member's TSP account after two years of service. The new hybrid retirement system now ensures that about 85 percent of military personnel leave the job with retirement benefits. In the trade-off that includes matching TSP contributions, pensions are reduced during the BRS period. The formula for calculating retired pay is a 2.0% multiplier for each service instead of 2.5% in the legacy system. But...as you can see below, BRS provides pension benefits to about 85% of the population, instead of the 19% that received benefits under the legacy system. Mike: Andy mentioned that only 14% of RC members and 19% of members receive government pension benefits in the legacy pension system. However, under BRS, 85% of the servicemen are entitled to government pension benefits. One thing to flag….If you opt for BRS in 2018… After 60 days After 60 days After 60 years After 2 years After 20 years Retirement age 2.0% Defined pension X 85% of all servicemen with X years of service are eligible for basic pension will remain . Service members leaving retirement benefits only after 2 years keep TSP savings + DoD contributions + any earnings
Blended Retirement System Explained
Grandparents are not automatically transferred to the BRS under the current pension system. Most currently serving members are eligible to elect BRS activation: Total service as at 31 December 2017 is less than 12 years Time Reserve: Less than 4320 retirement points as at 31 December 2017. Eligible members have all of CY 2018 to decide. Members who wish to remain in the current system - do not do anything that would not be in the best interest of the member BRS - can opt for a new link on or after 1 January 2018. On December 31, 2017, they will be grandfathered into the current pension system. No one is automatically transferred to a hybrid pension scheme. Members of the Reserve who joined before 2006 and have more than 4320 retirement numbers will remain in the legacy retirement system. But some service members may have a choice. Active duty service members who joined after 2006, but before January 1, 2018, and reserve duty service members with less than 4320 retirement numbers as of January 1, 2018 can choose whether to remain in the legacy retirement system. Or choose a new hybrid pension scheme. New connections after January 1, 2018 will be automatically enrolled in the new hybrid pension system.
Thrift Savings Plan Guide
"Those who performed spare parts service by December 31, 2017 ... completed less than 12 years of service" (less than 4320 retirement points) What is spare parts service? All Members: Active Guards/Reserves and Full-time Support Selected Reserve Individuals Ready Reserve Active Reserve Reserve = Members of the Individual Ready Reserve (IRR) are also eligible for the Hybrid Retirement System, but in the Hybrid Retirement System they must be. Students must be selected for admission. Therefore, IRR members are eligible to enroll in the Hybrid Pension System (because they are in the IRR as of December 31, 2017), but may not drill at all in a paid capacity during the 2018 calendar year. One extension after the 2018 registration window. BRS Ineligible: IRR Retired Reserve and Active Pension Reserve Inactive National Defense Active Waiting List: Eligible for BRS but not in paid status during CY18, must return to paid status after 30 days extension after CY18 enrollment. The window cannot be registered.
Permanent retirees are defined as those with creditable active service at or before age 60, with no change in basic retirement eligibility. Pension is still the main component of military pension, 2.0% x x = monthly pension defined contribution of 36 months average salary of senior year of service MIKE: Let's take a closer look at the new hybrid pension system. Andy: Monthly Retirement Pay: For those who retire after at least 20 years of active duty, retirement is still defined as the service member's monthly retirement pay. Instead of calculating an average of 2.5% of the service member's highest 3-year base pay, the service member's monthly retirement pay is multiplied by 2.0%. MIKE: TSP: Blended retirement systems include TSP components. All service members who join after January 2018 are automatically enrolled in TSP at 3% of their base pay, with the automatic 1% DoD contribution beginning after 60 days, and the DoD match increasing to 4% at the beginning of the third year. of service. . The DoD automatically contributes 1% and matching pay until the service member reaches 26 years of service. Note: Current service members who choose the new hybrid retirement system between January 1, 2018 and December 31, 2018 (we'll talk about that option in a moment) will receive an automatic 1% DoD contribution plus an additional 4%. DoD coordination. The first pay period of the election begins. Continuation Pay: The National Defense Authorization Act of 2016 also includes provisions for continuation pay to encourage service members to continue active duty. Ongoing wages are direct
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