The military has announced the blended retirement system (BRS) pay amounts for participants for 2020. Read on to find out more about the BRS and what’s new this year.
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Blended Retirement System Information
Previous military retirement benefits were based on the highest three years of income, but the 2016 National Defense Authorization Act and Public Law 114-92 introduced a more complex system.
The boosted benefit comes as a Department of Defense automated contribution, together with bonuses and payments tied to career milestones.
The BRS provides service members who do not become 20-year military professionals an option to walk away with some retirement savings after completion of their term of service.
According to Military One Source, the military retirement system changed because “Under the traditional system, only those who serve 20 years receive a retirement benefit. That means about 81 percent of service members leave with no benefit. Under the Blended Retirement System, about 85 percent of service members will receive a retirement benefit, even if they don’t qualify for full retirement”.
What is the Blended Retirement System?
In 2018 the military made significant changes to the services retirement system, which they renamed the “Blended Retirement System.”
The new system blends two types of income: –
The original annuity plan for service personnel who retire after 20 years
And an additional Thrift Savings Plan (TSP)
The TSP is a 401(K) retirement account run by the government, allowing members to use their own money to invest in government securities or stocks.
Examples include EE/E savings bonds, savings bonds, treasury bills, treasury bonds, and treasury notes. The government will also contribute to the plan via their employer.
The TSP can really power-up the service member’s retirement portfolio, within the BRS.
Blended Retirement System Eligibility
The BRS is optional, so newly commissioned officers should decide to opt into the military’s BRS or remain in the legacy, High 3 retirement system.
After 60 days of service, personnel are enrolled in TPS and get a 1% federal contribution of their basic pay. They contribute 3% of their basic salary to the TSP account per month, which can be stopped or changed.
After two years of service, the government matches the payment up to 4%, making a 5% total from the government on top of personal contributions. So, someone paying 5% of their basic pay will get 5% from the government totaling 10%.
Blended Retirement System Calculator
Continuation pay is calculated using the basic monthly salary multiplied by the appropriate multiplier for your branch and status.
Blended Retirement System Rates 2020
The amounts for 2020 will remain the same as they were in 2019, likely due to the economic situation caused by the coronavirus pandemic.
After 12 years of service (11 for the Army Reserve), members receive a cash payment if they opt to stay in for four more years. The payment rates are as stated below.
The 2020 BRS continuation pay rates are as follows: –
Continuation Pay Multiplier (CPM)
Army – CPM = 2.5
Air Force – CPM = 2.5
Coast Guard – CPM = 2.5
Marine Corps – CPM = 2.5
Navy – CPM = 2.5
Army – CPM = 4
Air Force – CPM = 0.5
Coast Guard – CPM = 0.5
Marine Corps – CPM = 0.5
Navy – CPM = 0.5
Further Information on Blended Retirement System
Stay up-to-date with military pay benefits, which are ever-changing.
For further information visit the Department of Defense compensation website – https://militarypay.defense.gov/BlendedRetirement/
The Department of Defense offers a Blended Retirement System Opt-In Course to help service members understand the advantages of the new system, as well as a BRS comparison calculator to compare the previous retirement system with the new option.
Have you opted in for the BRS? Do you think you’re better or worse off? Please share your thoughts in the comments section below.