The Military Blended Retirement System: What Every Servicemember and Lawyer Must Know

AuthorBy Marshal S. Willick
Pages13-14
FALL 2022 13
Since the rst Continental Congress, the United States
has provided pensions to career military members.
During the past 50 years, Congress has repeatedly
sought to reduce the cost of military retirement
benets. e calculation went from a percentage of
the highest grade held at retirement to a “high 3” calculation
similar to that used for federal civil service workers. Service
members were oered early retirements and baited with cash
pay outs that permanently reduced their future retirement
benets. Each of these was a quick x that did reduce the
overall liability of the federal government to members, but in
the end only proved to hurt the service members.
A major change in the actual total pension benets
payable was passed in 2016 and became eective in 2018.
Named the “Blended Retirement” plan, it was the biggest
restructuring of military retired pay in decades. Beginning in
2017, current members who had fewer than 12 total years of
service when the new plan became eective were able to
switch over to the new system or remain in the system that
covered them since they joined. It became mandatory for
members entering service on or after January 1, 2018.
Under the “Blended Retirement” system, there are four
components to military retired pay: a Dened Benet, a
Dened Contribution, Continuation Pay, and Elective Lump
Sum of the Dened Benet.
Dened Benet
is is similar to the current pension that is paid to a retired
member. However, the retired pay multiplier was reduced from
2.5% to 2% times number of years of service. A member
retiring at 20 years receives 40% of the high 3 base pay where
retiring at 30 years yields 60% of the high 3 base pay, etc.
Retired pay could be paid in dierent forms: by constant
pension payments, or by lump sum (with a choice of 25% or
50% of the value of the total retired pay, detailed below)
followed by smaller pension until full social security retire-
ment. e lump sum option can be paid out over four years
to lessen the tax impacts.
Dened Contribution
e rift Savings Plan (TSP) is no longer a voluntary
option. e military contributes a sum equal to 1% of base
pay to each member’s TSP account no matter whether the
member contributes. e government will match contribu-
tions made by the member on top of the guaranteed 1% up
to a maximum of 5%. e government will contribute 1%
of the member’s base pay automatically. e matching is as
follows: 1% is matched 1%; 2% is matched 2%; 3% is
matched 3%; 4% is matched 3.5%; 5% is matched 4%. e
benets become fully vested once a member has served at
least 2 years. is was considered the “shining star” of the
new system as it guarantees that every service member gets
some retirement no matter how long they serve. Any money
contributed by the member is fully vested upon contribu-
tion. ere is a two-year service commitment to vest in any
contributions made by the government.
Continuation Pay
To encourage qualied members to remain in the service,
“continuation pay” will be oered to all members. Each
The Military Blended Retirement System
BY MARSHAL S. WILLICK
What Every
Servicemember and
Lawyer Must Know
Published in Family Advocate, Volume 45, Number 2, Fall 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT