B. Blended Retirement System

• Library: Military Issues in Family Law 2017

B. Blended Retirement System

Until 2003, disabled veterans had to select either their full retirement compensation from the DOD or their disability benefit from the VA (Department of Veteran’s Affairs) with a reduced retirement annuity. This penalty was commonly referred to as the “VA offset.” In 2004, a new law was passed that revised the dollar-for-dollar offset military retirees historically waived in favor of VA disability compensation. In 2014, CRDP (Concurrent Retirement and Disability Pay) was fully phased in, and it is now legal for retirees to receive both VA compensation and retired pay at the same time, the premise being that servicemembers earn their retired pay by virtue of their service, and those who suffer a service-connected disability should receive VA compensation in addition to, not in lieu of, their service-earned retired pay.

The National Defense Authorization Act for Fiscal Year 2016, Pub. L. No. 114-92, 129 Sat. 726, created a new military retirement system that blends the traditional system of retired pay with a defined contribution to the TSP (Thrift Savings Plan) account. Beginning in January 2018, the military retirement system will experience its most significant change since the 1940s. Under the legacy “High 3” retirement system, only one in five servicemembers completed 20 years of creditable service and received retired pay...