Blended Retirement System (BRS): An Overview
The Blended Retirement System (BRS) was created with the Fiscal Year 2016 National Defense Authorization Act.
What is the Blended Retirement System?
The BRS is a new military retirement system.
The new system blends the traditional legacy retirement pension with a defined contribution benefit.
This benefit is applied to the service member’s Thrift Savings Plan (TSP) account.
The Blended Retirement System went into effect on January 1st, 2018.
The BRS was one of the most significant changes to the compensation system since World War Two.
Eligibility for Blended Retirement System
Your eligibility depends on when you joined the service.
If you:
- joined on or after January 1st, 2018, you are automatically enrolled into the BRS. That will be your retirement plan.
- have served on active duty with 12+ years before December 31st, 2017, you will be grandfathered into the legacy retirement system. Nothing will change for you.
- have served on active duty with less than 12 years, as of December 31st, 2017, you are grandfathered under the legacy retirement system but may choose to opt into the BRS. The opt-in period is from January 1st-December 31st, 2018. You will not be moved to the BRS unless you request to do so.
- are a cadet or a midshipman attending a service academy as of December 31st, 2017, or if you are in the Reserve Officer Training Program, and have a signed contract as of December 31, 2017, you’re also grandfathered under the legacy retirement system.
- If your commissioning date or when you will be placed in pay status occurs after the 2018 opt-in window, you’ll have 30 days upon commissioning to opt-in to the BRS. If you enter an academy or sign your service contract on or after January 1st, 2018, your retirement plan will be the BRS.
- are in the reserves or national guard and have accrued more than 4,320 retirement points as of December 31st, 2017, you will be grandfathered into the legacy retirement system, and nothing will change.
- have accrued fewer than the 4,320 retirement points as of December 31st, 2017, you will be grandfathered into the legacy retirement system but can choose to opt-in to the BRS.
- The BRS won’t change how you accrue retirement points or when you can retire.
Defined Benefit
- The BRS provides a defined benefit. So this means that it is a monthly pension for life. You will receive this benefit after 20 years or more of active duty service. How much you receive depends on how long you have served. The longer you do, the higher your benefit.
- The BRS uses a multiplier to figure out how much money you will receive. This would be 2.0% times the years served times the average of your highest 36 months of basic pay. For example, if you have served 20 years, you would receive 40% of the average of your highest 36 months of basic pay. If you served for 25 years, you would receive 50%, and so on.
- The Defined Benefit also has an annual Cost of Living Adjustment (more commonly referred to as COLA).
Defined Contribution
- The Defined Contribution is a way for you to save for retirement, whether you plan to stay in the service for two or 20 years. The Blended Retirement System will provide government benefits toward retirement through your Thrift Savings Plan. This offers you access to a mix of investment funds through contribution to a traditional (pre-tax) retirement account, a Roth (after-tax) retirement account, or a combination of both.
- If you were automatically enrolled in the BRS because you joined after January 1st, 2018, you would need to wait 60 days before the 1% Service Automatic Contribution will begin. You will start to do so immediately, if you opt in instead.
- If you were automatically enrolled in the BRS because you joined after January 1st, 2018, you would need to wait two years before you start Service Matching Contributions. You will be able to start receiving them immediately if you elect to opt in instead. Your service will match up to an additional 4% of your basic pay. For example, if you put in 3%, you would have a total of 7%. 3% from what you put in, 1% for the Service Automatic Contribution, and 3% Service Matching Contribution.
Continuation Pay
- Through the Blended Retirement System, you are eligible to receive Continuation Pay. Continuation Pay is a one-time, mid-career bonus payment in exchange for an agreement to perform additional obligated service. Your specific service will determine your commitment, which will be a minimum of three years.
- The money is payable between the completion of 8 years of service, but before you hit the completion of 12 years of service. This is based on your pay entry base date.
- You are eligible for this if you are active duty. This includes AGR (Active Guard Reserve) and FTS, (Full Time Support.) National Guard and Reserves is also eligible.
- The amount for active duty can be from 2.5 to 13 times your regular pay. Your taxable contribution pay can place you in a higher income bracket. You can then split it up into four equal payments over four years to avoid that.
- If you are in the National Guard or Reserves, you can also do Continuation Pay. This will require that you agree to perform additional obligated service. You would receive between 0.5 to 6 times the monthly basic pay of an active duty service member, in the same pay grade.
Lump Sum
- Under BRS, you may be eligible to elect to receive a discounted portion of your retirement pay upfront.
- If you opt for a lump sum, you will need to decide if you want 25 or 50% of your future payments at retirement. You may receive one lump sum or equal annual payments, one a year for up to four years. Monthly retired pay reverts to the full amount at full social security retirement age, which is usually 67 years old.
- The lump sum of 25 or 50% is discounted to the present value. Therefore a lifetime of equal, personal, monthly payments is usually worth more.
The Blended Retirement System will be the new way of retirement when it comes to the military. While some are still grandfathered in, new recruits will automatically be enrolled in the BRS.