According to the Department of Defense, nearly 1.6 million current service members now have a big choice to make: to remain in the legacy “High-3” retirement system or opt into the new Uniformed Services Blended Retirement System (BRS).
It’s one of the most significant changes to the military pay and retirement system in the last 70 years. The change took effect Jan. 1, with all new entrants to the military being enrolled in the BRS.
If a service member entered on or before Dec. 31, 2017, the service member is “grandfathered” into the legacy system.
So, who are the 1.6 million? If an active-duty service member has fewer than 12 years of service as of Dec. 31, 2017 or is a member of the National Guard or Reserve with fewer than 4,320 retirement points, they’re going to have to choose by Dec. 31, 2018.
It’s a big decision, and Army Community Service is offering a continuing series of briefings to assist service members who must choose between the legacy and BRS systems.
“We’re conducting briefings on the BRS for service members, especially those that are opt-in eligible,” said Peter Deschamps, ACS personal financial counselor.
“So whether they’ve already taken the mandatory online training or have not yet taken the training, this might be a good time to come in, ask questions, and make sure they have the information they need in order to make the best informed choice regarding their retirement plan options.”
The ACS briefings are held every Monday from 9 to 11 a.m.
Deschamps said that the questions at the briefings run the gamut, but everyone wants to know one thing — what is the best choice.
“Service members that are opt-in eligible certainly want to know what the best choice is for them and their family and that’s very understandable,” he said. “Unfortunately, we can’t tell them exactly what the best choice is for them.
“It’s a very personal, individual choice, and quite frankly, I could find the argument for the same service member either opting in or choosing to remain in the legacy system, depending on various factors.”
The advice that ACS counselors are giving to service members is to first consider their career plans. Deschamps said this highlights the big difference between old and new systems.
“If a service member doesn’t complete 20 years of service [under the old legacy system], then they transition without any government-funded retirement benefits,” he said.
That’s an issue, Deschamps said, that DoD is trying to address with the new blended system.
“The blended plan features both an annuity similar to what is the legacy plan, but now with government-provided funds into the service members’ Thrift Savings Plan account — which they can then take with them if they transition with less than 20 years of service,” Deschamps said.
The real difference is the new system will allow the service member to receive government money toward retirement without having to complete the full 20 years of service,” he said.
Beyond that big difference in retirement options, there are additional features to BRS such as “continuation pay,” a mid-career bonus and an option to receive a portion of the retirement annuity up front in a lump sum.
“For service members that aren’t sure if they’re going to complete 20 years of service, the BRS gives them some options,” Deschamps said.
Editor’s note: To register for the Blended Retirement briefing, call Army Community Service Financial Readiness at 301-677-5590.