As a follow-up to Military Saves Week, now is a good time to reinforce the message about the Blended Retirement System (BRS) to the Service members on your installation. The BRS has been in effect for a few months – do all your members who are eligible to opt in have everything they need to make an informed decision? Do they know exactly what the BRS is and how the Thrift Savings Plan (TSP) ties in to it? Have they done the mandatory training yet?
Benefits of the BRS for Service Members
- It covers more members than the legacy retirement (“High-3”) system does.
- It encourages saving money for retirement.
- It allows for earlier investment in a retirement plan.
- It includes automatic and matching contributions from the Government – and the automatic contribution goes in no matter how much the member contributes, at no cost to him or her.
- It adds an incentive to stay in the military, with continuation pay – a mid-career bonus payment.
- It provides a personal retirement benefit even if members don’t serve the 20 years needed to qualify for monthly retired pay.
Who Is Eligible?
Keep in mind that eligibility depends on when military service began, using the Pay Entry Base Date (PEBD). The PEBD denotes how much of a member’s service is creditable toward longevity for pay purposes.
- Anyone who had fewer than 12 years of service (or Reserve/National Guard members with fewer than 4,320 retirement points) on December 31, 2017, can either opt in to the BRS or remain with the legacy retirement system.
- Anyone who had more than 12 years of service on December 31, 2017, stays with the legacy retirement system.
- Anyone who joined the military on or after January 1, 2018, (a “new accession”) is automatically enrolled in the BRS.
Even if retirement seems a long way off, a general rule of retirement planning is to start saving as early as possible. By investing in a retirement plan now, Service members’ money can start getting to work for their future right away.
Investments grow thanks to the principle of compounding, where the earnings on any contributions get added to the regular contributions.
Check out the compound interest calculator to see how retirement accounts can expand over the years.
Knowledge is Key
Service members must be fully informed to ensure that whatever decision they make is in their best interest, depending on their personal or family circumstances.
Encourage the use of tools that are in place to help, such as the Department of Defense’s BRS Comparison Calculator, which enables members to compare their estimated retirement benefits under the BRS versus the legacy retirement system.
Take the Training
All Service members who are eligible to opt in to the BRS, as well as all new accessions, must take a course to learn about the BRS.
The mandatory BRS Opt-In Course and other training courses for all levels of personnel, including leaders, financial counselors and educators, can be accessed online.
How You Can Help Your Service Members
- Provide them with any information they still might need to help make their decision about the BRS.
- Recommend that they consult a financial professional, especially since they can’t change their mind after they opt in to the BRS. Give them contact information for the personal financial management or counseling services available on your installation or through your branch of Service.
- If they have decided to opt in, encourage them to enroll in the BRS soon. They have all of 2018 to enroll, but the earlier they do it, the earlier the Government’s contributions will start to accumulate in their retirement accounts.
For more information, browse the Quickseries® library of guides about military life and finances, including BRS & TSP – Invest in Your Future.