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By Mass Communication Specialist 3rd Class Michael Lopez
Navy Public Affairs Support Element East, Detachment Southeast
JACKSONVILLE, Fla. – Active Component Sailors with less than 12 years of service and Reserve Component Sailors with fewer than 4,320 retirement points as of Dec. 31, 2017, will have the option to enroll in the Blended Retirement System (BRS) between Jan. 1, 2018 and Dec. 31, 2018 after the completion of required training.
Once enrolled, the decision is irreversible. Eligible Sailors who elect not to enroll will be grandfathered into the current retirement system, while Sailors who join the Navy after Jan. 1, 2018, will automatically be enrolled in the BRS.
“Some of the benefits are certainly determined by a Sailor’s long term goals, but junior Sailors who have been serving for only a few years have the most to gain,” said Chief Electronics Technician Wenecio Godfrey, Naval Station Mayport’s command financial specialist. “The ability to have more savings power with compounding interest over a longer span of time definitely serves as an advantage in the long run for those Sailors.”
Under the BRS, and after 60 days of entering the service, the Department of Defense (DoD) will automatically make a contribution to the Sailor’s Thrift Savings Plan (TSP) that is equivalent to one percent of the Sailor’s basic pay and will begin to match the Sailor’s contributions up to five percent after two years of service.
“A common misconception we see so far is that some Sailors think the defined benefits rate after retirement in the form of a pension will be replaced by the new TSP benefits, which is not true,” said Godfrey.
Sailors still retain the benefit of a monthly annuity after completion of at least 20 years of service similar to the current retirement system; however, this amount will be calculated differently. The BRS formula is 2 percent multiplied by years served, multiplied by the average of the highest 36 months of basic pay received. This formula results in a Sailor who retires after 20 years receiving 40 percent of the average of their highest three years of base pay as an annuity. Whereas, the current retirement system uses the same formula, but uses 2.5 percent as the multiplier. This results in the same Sailor receiving 50 percent of their average high three years of pay as an annuity, but will forgo the matched contributions to their TSP.
Part of the BRS’s goal is to benefit Sailors who choose not make a career out of the Navy while offering larger savings power through matched contributions to all who enroll in the BRS whether they are career Sailors or not.
According to the DoD’s official military compensation website, approximately 81 percent of those members who join the military leave with no retirement 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.
“Only a small portion of service members will stay until retirement,” said Godfrey. “So the new retirement system allows those Sailors to still walk away with more in savings than they otherwise would have before. The matched contributions can also serve as an encouragement for career Sailors to contribute more to their TSP and put them in a better situation for retirement.”
Sailors enrolled in the BRS that earn a retirement pension can choose to receive a portion of their pension in a lump sum of 25 to 50 percent in exchange for a reduced retired pay until reaching full retirement age.
“The lump sum option can also be a beneficial factor to those Sailors who plan to start another career after they retire from the Navy or even start their own business, because they will still have the ability to add that money back to their retirement fund through new contributions,” said Godfrey. “It all comes down to what the individual is planning for in the long run.”
The BRS also includes a continuation pay revision which will be an additional payment to Sailors in the form of a bonus that is payable after 8 years of service, but before completion of 12 years of service. Sailors will receive this pay for committing to at least three more years of service. Active component Sailors will be eligible for a cash incentive of 2.5 to 13 times their regular monthly basic pay, while Reserve component Sailors will be eligible for 0.5 to 6 times their monthly basic pay based on the skills most needed by the Navy at the time of eligibility in both cases.
According to the Office of the Chief of Naval Personnel, in an effort to facilitate a smooth transition to the BRS, all Navy service members will be required to complete either the BRS Leader's Training course or the BRS Opt-in Training course, which are now available on Joint Knowledge Online (JKO) and Navy E-learning.
Sailors can find more information on BRS at the Department of Defense BRS web page http://militarypay.defense.gov/blendedretirement/
| Date Taken: | 11.02.2017 |
| Date Posted: | 11.02.2017 14:25 |
| Story ID: | 253888 |
| Location: | JACKSONVILLE, FL, US |
| Web Views: | 256 |
| Downloads: | 1 |
This work, Blended Retirement System opt-in period approaching, by PO2 Michael Lopez, identified by DVIDS, must comply with the restrictions shown on https://www.dvidshub.net/about/copyright.
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