Senator Calls for New Opt-In Period for Military's Blended Retirement System, More Financial Literacy
A new bill from Sen. Patty Murray, D-Wash., would require service members to "affirmatively" choose between enrolling in the blended retirement system or a traditional military pension.
Sen. Patty Murray, D-Wash., on Tuesday introduced legislation that would provide military service members an additional opportunity to opt into the recently implemented blended retirement system.
The Thrift Savings Plan and the Defense Department launched the blended retirement system in 2018, allowing members of the military a new option where they could receive an employer match for their TSP contributions in exchange for a less generous pension benefit. Although all new service members are now automatically enrolled in the blended retirement system, members of the military who served prior to Jan. 1, 2018, had to manually opt into the program before the end of 2018.
During 2018, more than 400,000 people chose to enroll in the blended retirement system. In a press release, Murray described that turnout as "lackluster," and suggested that more would have enrolled if the Pentagon provided more effective financial literacy training.
Last fall, the Government Accountability Office offered recommendations for the Defense Department to improve its efforts to encourage strong retirement saving strategies among service members, noting that during the blended retirement system opt-in year, only 32% passed a required opt-in course on their first attempt.
Murray's bill, the Re-Open Enrollment for Servicemembers to Opt-In to Updated Retirement Choice for Enduring Security Act, would establish a new enrollment period during which existing servicemembers would be required to "affirmatively choose" whether to enroll in the blended retirement system or stay on the legacy pension plan. It also would require spouses to sign off on the decision, similarly to how the military's Survivor Benefit Plan works.
The legislation also would require the Defense Department to provide additional training on the new retirement system, led by instructors rather than an automated webinar, as well as expanding other financial literacy training programs offered by the Pentagon. And it would create a department-wide advisory council on financial readiness, where nonprofits that work on financial literacy and veterans groups could advise leadership on financial readiness programs.
"Service members and their families sacrifice so much to keep us all safe, and the last thing they should have to worry about is how they'll get by once they have completed their service," Murray said. "The RESOURCES Act is an important step we must take for military families in Washington state and across the country to ensure that they have all of the necessary tools, opportunities and knowledge to not only manage their current financial situations, but also effectively plan for the future."
TSP spokeswoman Kim Weaver said the agency is reviewing the bill. "We look forward to working with Sen. Murray and the Department of Defense on this legislation," she said.