Congress Unveils Deal to Overhaul Military Retirement System

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Pension360 has covered the months-long debate over how to overhaul the U.S. military retirement system.

Now, Congress has unveiled a bill to act on Pentagon-endorsed recommendations made last year that include shifting new service members into a 401(k)-style plan and restructuring the retirement system so that more soldiers receive benefits.

Details from Government Executive:

Under the proposal, modeled after recommendations made by the Military Compensation and Retirement Modernization Commission earlier this year, new troops would automatically be enrolled in the Thrift Savings Plan and receive a matching contribution from the government. Service members who stay in the military for 20 years, and are thereby entitled to a retirement pension, would receive a less generous calculation for their annuity.

The bill attempts to move away from the 20-year, all-or-nothing pension system currently in place for military members. Only about 17 percent of troops serve for 20 years and become eligible for the benefit. To encourage members to stay in the military, they would receive “continuation pay” after 12 years of service.

The new blended retirement system would only affect new service members. Current service members are grandfathered into the current system, but could opt into the new one. The legislation also calls for a program to educate troops about the modified retirement system.

The overhaul still needs to pass both chambers of Congress and be approved by the President.

 

Photo by Brian Schlumbohm/Fort Wainwright PAO via Flickr CC License

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