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Pentagon Makes Push to Educate Troops on New Retirement Plan

retirement plan and nest egg

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 of, I say, self investment," Boswell told reporters at the time.

The retirement overhaul, approved in the 2016 National Defense Authorization Act, essentially means troops will be offered a slightly smaller defined benefit equal to about 40 percent of pay, rather than 50 percent, after 20 years of service, but also a 401(k)-like defined contribution Thrift Savings Plan with matching contributions up to 5 percent after just two years of service.

Service members who retire after two decades would receive both benefits -- the annuity (calculated by multiplying 2 percent by the number of years' service by the monthly average of the three highest years of basic pay) and the TSP.

Meanwhile, the vast majority of troops -- more than eight in 10 -- who leave the service before the 20-year mark but after two years would receive the fully vested value of the TSP, marking an "opportunity to leave with some financial resources that they can move into another retirement plan in another company," Boswell said. "That's what makes this, I think, very different from the old system."

The new plan also features a mid-career bonus in the form of continuation pay around the 12-year mark to entice troops to stay in the service.

The BRS course for military and civilian leaders is the first in a series of what will be four instructional lessons designed to educate various parts of the military population about different facets of the new plan -- which officials repeatedly emphasized doesn't affect currently serving troops or retirees.

In September, the department plans to offer a "train the trainer" course for financial managers and retirement services officers "who will assist commanders in their training mission."

In January, the department wants to launch an "opt-in" course for service members who will have fewer than 12 years of service by Dec. 31, 2017, and thus the option to switch from the old retirement plan to the new system. Officials couldn't say how many troops fall into this category, but said the choice to change retirement plans would be completely voluntary and theirs to make alone.

"None of our currently serving members are going to be automatically switched into the new system," said Andrew Corso, assistant director of the office of military compensation in the office of the assistant secretary of defense for manpower and reserve affairs. "Everyone who is currently serving … will be grandfathered and they will, in many cases, have an option. But nobody is going to be automatically switched."

At the heart of this "opt-in" course will be a calculator to provide comparisons between the two retirement options to help troops make an informed decision, officials said. "The situation for each person is entirely different," Corso said.

In 2018, entrants into the military will take a "new accession" course about the new retirement plan during initial entry training and commissioning education opportunities.

-- Brendan McGarry can be reached at brendan.mcgarry@military.com. Follow him on Twitter at @Brendan_McGarry.

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