9155 / What is the blended retirement system that is available for military servicemembers?
The Department of Defense instituted a new retirement plan that started on January 1, 2018 called the Blended Retirement System (BRS).1 BRS is a combination of defined benefit and defined contribution pension plans. This new retirement plan is mandatory for active and reserve component servicemembers who entered the military on or after January 1, 2018.2 BRS was available to opt into for active duty servicemembers who had less than 12 years of service on December 17, 2017 and for reserve servicemembers who had fewer than 4,324 retirement points as of December 17, 2017.
BRS combines familiar aspects of the legacy retirement plans’ defined benefit pension calculation but also provides for defined contributions into the Thrift Savings Plan (TSP). The defined benefit calculation for active and reserve components uses the High-36 calculation for Basic Pay times the 2.0 percent multiplier (rather than the 2.5 percent multiplier) times the creditable years of service. This means that a servicemember who completes 20 years of military service will receive 40 percent of his or her High-36 Basic Pay upon eligibility for retirement benefits.
The defined contribution calculation is based on a combination of guaranteed contributions by the government to the TSP and matching contributions made by the servicemember to the TSP. The government agrees to contribute 1 percent of the servicemember’s base pay upon entry into the military. The servicemember is automatically enrolled to contribute 3 percent of his or her base pay upon entry. Upon completion of two years of service, the government will match up to 4 percent of the servicemember’s contribution and continue to contribute the automatic 1 percent. This means that a servicemember could contribute 5 percent of his or her base pay, receive the obligatory 1 percent and matching 4 percent from the government and put a total of 10 percent of the base pay in the TSP for an annual, tax-deferred retirement contributions.