Pentagon Spells Out Details of Troops' New Retirement System

Spc. Steven Cope/Defense Department file photo

The Defense Department on Wednesday laid out the final details for its new blended retirement system for military personnel, which will automatically enroll new service members and give existing troops the option of signing up.

The changes were included in the fiscal 2016 Defense authorization bill as the result of a longstanding effort to reform military service members’ compensation package. Deputy Defense Secretary Robert Work, an Obama appointee who President Trump asked to stay on, officially issued the policy that will take effect in 2018.

Under the system, new troops would automatically be enrolled in the Thrift Savings Plan and receive a matching contribution from the government. The government will contribute between 1 percent and 5 percent of service members’ salaries toward their TSPs, depending on what they elect to contribute themselves, though they will be defaulted into contributing 3 percent of their paychecks. The TSP account will begin 60 days into their service. Those who stay in the military for 20 years, and are thereby entitled to a retirement pension, would receive a less generous calculation for their annuity.

» Get the best federal news and ideas delivered right to your inbox. Sign up here.

The new system moves away from the 20-year, all-or-nothing pension system currently in place for military members. Only about 17 percent of troops serve for 20 years and become eligible for the benefit.

To encourage members to stay in the military, they would receive “continuation pay” after 12 years of service. That payment will amount to between 2.5 and 13 times service members’ monthly basic pay. The guidance allows members to receive the payment in one lump or in four equal installments spread out over four years. Individuals who accept the bonus must sign on to at least three additional years of service, and may have to repay it if they do not complete the added time.

The new blended retirement system only automatically affects new service members starting Jan. 1, 2018. Current service members are grandfathered into the existing system, but can opt into the new one. They will have all of 2018 to make their decision. The Pentagon is in the process of educating troops about the modified retirement system, and launched its third of four courses this week. Troops electing to enroll in the blended system must complete the training to be eligible. Once enrolled via the “myPay” website, the decision is irrevocable, the guidance stated. 

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.