Push to Educate Troops on New Retirement Plan

"...The U.S. Defense Department is in the midst of a push to educate troops about the military's new blended retirement system.

The Pentagon is making a "full-court press" to bring officers, enlisted personnel and their families up to speed on the new benefit, slated to take effect Jan. 1, 2018, according to Wayne Boswell, director of financial readiness in the office of the assistant secretary of defense for readiness.

The department's June rollout of the so-called blended retirement system, or BRS, course on the website Joint Knowledge Online and other informational materials on the website Military OneSource marked the "first step in making sure that we reduce the speculation and the rumors, but get the facts out there so that as a force we can move forward into this new era ..."

Read more at Military.com

What is the Blended Retirement System?

"...In November 2015, the President signed the FY 2016 National Defense Authorization Act. Included among the thousands of items in the act was a significant change in the military retirement system.

The change, based upon recommendations from the Military Compensation and Retirement Modernization Commission, is intended to provide Service members with a portable retirement benefit whether serving four years or forty years, while providing cost savings...

The new blended retirement system retains the 20-year cliff vested annuity, but reduces the multiple from 2.5% to 2.0%.

Under the new plan, you would receive 40% of the average of your highest three years of base pay after 20 years of service. Each additional year of service in excess of 20 years provides you with an additional 2% of your high three base pay.

To offset the reduced defined benefit, the defined contribution component, TSP, becomes an integral part of the retirement plan...."

Read more at MCCS

Experts Warn New Retirement System Has Major Flaw

"...Top financial experts are worried about a key piece of the military's new blended retirement system and are urging the Pentagon not to shortchange career troops — especially enlisted service members.

Specifically, the American Academy of Actuaries is scrutinizing the new system's lump-sum payout option and precisely how the Pentagon will calculate it for those who elect to cash such a large portion of their pension.

Military retirement reform became law last year and takes effect in 2018, giving future retirees the option of taking traditional monthly pension checks or accepting smaller monthly pay along with a lump-sum cash payment at the time of separation. The lump sum would total either 50 percent or 25 percent of a service member's promised pension benefits.

It’s similar to the military's longstanding "REDUX" retirement option, which..."

Read more at Military Times

Negotiators Reach Agreement on 2016 Defense Authorization Bill

"...House and Senate negotiators on Tuesday reached agreement on a $612 billion defense authorization bill for fiscal 2016 that includes a 1.3 percent pay raise for service members, trims to some military benefits and a dramatic overhaul of the military retirement system...

As lawmakers unveiled the deal's details Tuesday, Pentagon spokesman Peter Cook said Defense Secretary Ash Carter will still recommend a veto of the legislation...

The military retirement overhaul would replace the current 20-year, all-or-nothing retirement with a "blended" compensation system featuring a 401(k)-style investment plan that promises all future troops will leave the service with some money for retirement, even if they don't serve 20 years.

Military advocates praised that reform as a boost for the 83 percent of troops who leave service with no retirement benefits..."

Read more at militarytimes.com

Negotiation Reached on 2016 Defense Authorization Bill

"...Defense Secretary Ash Carter told troops and veterans Tuesday that he's looking at some large-scale reforms for the military's personnel system...

During the troop talk, an airman asked about proposed changes to retirement benefits. Carter said the new benefits package that is nearing approval on Capitol Hill is designed to appeal to today's young people rather than simply save money.

The proposed change to the military retirement benefit would shrink the size of the pension by 20 percent but also give nearly all troops some government cash contributions to individual retirement savings accounts. The proposal also would, for the first time, provide a retirement benefit to troops who separate before reaching 20 years of service"

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TSP Will Need to Adjust to Military Retirement Reform Changes

"...A congressional proposal to expand the Thrift Savings Program to members of the military would flood the program with hundreds of thousands of new members, cost millions of dollars and require boosting staff – and the TSP is up to the challenge.

The Military Compensation and Retirement Modernization Commission recommended in January that the military move from a pension system that rewards 20 years or more of service to a blended plan involving a pension and Thrift Savings Plan contributions. Congress has followed suit with legislation that mirrors the recommendations.

While service members can currently contribute to the TSP they receive no matching contribution from the military. Under the proposed plan – one that closely mirrors federal civilian plans - service members would see their contributions matched up to 5 percent of their salary, plus a base of 1 percent regardless of their contribution levels..."

Read more at federaltimes.com

Fast Resolution Expected on Military Retirement Reform

"...Military retirement reform is among the most dramatic changes to Pentagon policy in the annual defense authorization bill. It also should be one of the easiest issues for House and Senate negotiators to finalize.

Despite the complex, sweeping changes the reform plan would bring, both the House and Senate versions of the retirement overhaul are strikingly similar, with only minor differences to be worked out before final passage.

The two retirement plans are both based off recommendations from the Military Compensation and Retirement Modernization Commission earlier this year. They call for replacing the 20-year, all-or-nothing current system with a 401(k)-style system that vests after two years and allows all separating troops to leave with some benefits..."

Read more at militarytimes.com

House Panel Approves Retirement Reform Bill

"...The House Armed Services Committee early Thursday adopted a $612 billion defense authorization bill which would radically reform military retirement but reject changes to a host of other benefit trims proposed by the Pentagon.

By a 60-2 vote, the panel approved the annual budget legislation after almost 19 hours of debate, setting the stage for a full House vote in mid-May. The bill is one of the most-followed measures among the defense community, because of the hundreds of policy renewals and revisions involved...

The retirement reforms -- which follow recommendations from a two-year independent commission review -- would update the current 20-years, all-or-nothing system with a blended benefits package featuring 401(k) style investments for all troops.

Supporters have praised that move as finally giving some retirement benefits to the 83 percent of troops who serve less than 20 years, but opponents worry that plans to cut pension-style payouts by one-fifth could hurt retention of senior service members."

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Retirement Revamp on Fast Track

"...The old, reliable military retirement system is about to be retired.

House and Senate lawmakers are moving ahead with dramatic plans to replace the current 20-year, all-or-nothing deal with a "blended" compensation system, complete with a 401(k)-style investment plan that promises all future troops will leave the service with some money for retirement.

The moves echo recommendations from the Military Compensation and Retirement Modernization Commission earlier this year, which pushed for changes to recognize the estimated 83 percent of service members who leave the military with no retirement benefits.

But some outside advocates still worry that, while well-intentioned, the change could decimate the senior noncommissioned and officer ranks, by giving them too much incentive to start a civilian career earlier and not enough incentive to stay to 20 years..."

Read more at militarytimes.com

DoD Needs More Info on Retirement Overhaul Proposals

"...Pentagon officials are raising questions about the conclusions reached by a blue-ribbon commission and its proposal to overhaul the military retirement and health care systems, a top defense official said.

In the Defense Department's response to recommendations from the Military Compensation and Retirement Modernization Commission, the military services are likely to ask for more information about the panel's detailed proposals on retirement, health care and quality-of-life programs.

Most Defense Department officials have had no access to the data that the commission's recommendations are based on, and that lack of background information makes it difficult for the services to provide a firm response to the proposal, Chief of Naval Personnel Vice Adm. Bill Moran said Wednesday..."

Read more at militarytimes.com

Carter 'Open to Reconsidering' Military Retirement System

"...Secretary of Defense Ashton Carter said Sunday he is open to altering the military retirement system but would not want changes forced on current or former servicemembers.

A congressionally chartered Military Compensation and Retirement Modernization Commission submitted proposals last month to lower personnel costs in the Defense Department. It recommended changes to entice troops to opt out of the current pension system, which gives substantial retirement pay to those who serve 20 years or more but none to those who serve less time. The panel suggested all troops be automatically given a savings plan account that would sock away 3 percent of pay along with a contribution from the military..."

Read more at Military.com

Retirement Proposal Cautiously Supported by Sen. Graham

"...An influential senator said he supports the idea of modernizing military retirement, but wants to take a close look at the research and analysis underpinning the latest proposal for historic change.

Sen. Lindsey Graham, R-S.C., a colonel in the Air Force Reserve, leads the Senate Armed Services Committee's personnel panel, making him one of Washington's most important figures in the emerging debate about overhauling military retirement.

Graham signaled cautious approval for the new proposal that would shrink the size of traditional military retirement pay by about 20 percent and also add a new defined-contribution benefit for troops who serve fewer than 20 years.

"This committee wants to embrace modernization, but it won't be punitive," Graham said at the close of a two-hour hearing on the topic..."

Read more at militarytimes.com

New Military Retirement System to be Proposed

"...The long-awaited report on military compensation set to drop Thursday will propose fundamental changes to military retirement and health care benefits, according to several people familiar with the report.

The Military Compensation and Retirement Modernization Commission will propose detailed legislation to phase out the current 20-year cliff-vesting pension payable immediately upon leaving service, according to people who have been briefed on the report but requested anonymity before discussing its recommendations.

The plan calls for Congress to create a hybrid system that includes a smaller defined-benefit pension along with more cash-based benefits and lump-sum payments. A significant portion of troops' retirement benefits would come in the form of government contributions to 401(k)-style investment accounts, those familiar with the report told Military Times..."

Read more at marinecorpstimes.com

Political Battle Brewing over Military Pay

"...The Pentagon is bracing for one of its biggest political battles in years as a blue-ribbon commission on military compensation and retirement nears the end of its two-year study and moves closer to releasing its proposals for change by Feb. 1.

An internal document obtained by Military Times reveals the Defense Department is setting up a rapid-response plan that will scrutinize the commission's potentially controversial proposals and send a recommendation to President Obama within 60 days, or by April 1...

military officials worry that sweeping changes to military compensation — such as radically changing the current retirement system — could devastate recruiting and retention and threaten the long-term health of the 41-year-old all-volunteer force..."

Read more at marinecorpstimes.com

New Military Retirement System Proposal Might be Popular

"...A proposal that would transform the military retirement system by promising smaller monthly checks but also giving troops a lump sum "transition pay" immediately upon retirement could turn out to be very popular among most service members, according to a new study.

The study published Wednesday by the RAND Corp. think tank looked in detail for the first time at how today's 1.4 million active-duty troops might respond to a sweeping overhaul of the traditional military retirement system.

The results suggest that many troops, given a choice, would prefer to take an end-of-career payout, probably amounting to about 2½ years of their annual basic pay, in exchange for smaller monthly checks during their so-called "working-age retirement" years before age 65..."

Read more at militarytimes.com

Military Pension Cuts Opposed by Civilians

"...The majority of middle-class families, both civilian and military, are opposed to the proposed scaling back of military retirement benefits by the Department of Defense, according to the First Command Financial Behaviors Index released Monday.

The index shows 68 percent of middle-class civilian families, defined as those making at least $50,000, are opposed to military pension cutbacks. Sixty-five percent o..."

Read more at fa-mag.com

Troops Distrust Proposed Retirement Reform

"...The Pentagon’s new proposal for reforming military retirement is drawing sharply negative reactions from today’s career-minded service members, according to a recent survey of Military Times active-duty readers.

By a margin of more than two to one, active-duty troops said they oppose the Defense Department’s proposal that would scale back the size of the lifetime monthly retirement payments promised to troops who serve 20 years or more.

That proposal, unveiled March 6, would compensate troops for the smaller pension by providing more cash-based benefits earlier in life, such as retention pay at 12 years lump-sum transition pay for those who leave with 20 years or more, and tax-free government contributions to retirement investment accounts for all troops starting at three years of service and fully vesting at six years..."

Read more at Military Times

No Formal Proposal for Retirement Overhaul Until 2015

"...Defense Secretary Chuck Hagel wants to wait until next year before asking Congress to make fundamental changes to the current military retirement system, a Pentagon spokesman said Friday.

One day after the Defense Department released detailed proposals for military retirement reform, Hagel’s spokesman said that the politically sensitive suggestions should not be considered formal recommendations.

“No one of these options is a favorite. No one is preferred. These are just options that are teed up to be considered,” Rear Adm. John Kirby said during a press briefing Friday.

The proposals were developed by the Defense Department’s Personnel and Readiness Office and sent to both Capitol Hill and the Military Compensation and Retirement Modernization Commission..."

Read more at Military Times

Proposal to Allow Immediate Retirement Pay for Reservists

"...Reservists would be eligible to begin receiving military retirement pay immediately after completing 20 years of part-time service under a new Pentagon proposal for overhauling the retirement system.

The plan would blur the lines between active and reserve careers by allowing both to qualify for “working age” retirement checks that for decades have been limited to the full-time active-duty force.

The fundamental change for reservists — who today must wait until..."

Read more at Military Times

New Retirement Options Being Weighed to Cut Costs

"...Military enlistees could soon be offered a range of new retirement options as the Defense Department tries to get a handle on a retirement benefit fund that is spiraling out of control.

Pentagon data show there are more than 2 million military retirees and survivors who were paid $52.4 billion from the Military Retirement Fund during the 2012 fiscal year. A report by the Department of Defense Office of the Actuary suggests that spending will likely double within 20 years.

That level of spending, combined with the rising cost of servicemembers’ pay and benefits, is too high, Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey told an audience at Yokota Air Base earlier this summer.

He called the current retirement system unsustainable..."

Read more at Stripes