What is the Blended Retirement System?
The Blended Retirement System (BRS) is the modernized retirement plan for the U.S. military, introduced on January 1, 2018, to provide service members with a flexible and portable retirement.
Key Components of the Blended Retirement System:
Defined Benefit DB (Traditional Pension) is similar to the traditional military pension but with a lower multiplier compared to the legacy High-3 plan.
The retirement benefit is calculated using the following formula:
2 percent x Years of Service x Average of the Highest 36 Months of Basic Pay.
Defined Contribution DC (Thrift Savings Plan (TSP)): The BRS introduces a defined contribution component through automatic and matching contributions to the TSP, similar to a 401(k).
The Department of Defense (DoD) contributes an automatic 1 percent of a service member's basic pay to their TSP account after 60 days of service. Service members are automatically enrolled at 5 percent of their basic pay, which they can increase or decrease.
Matching Contributions: The DoD matches contributions up to 4 percent of basic pay, for a total possible contribution of up to 5 percent (1 percent automatic + 4 percent matching). Matching contributions begin after two years of service and continue through the 26th year of service.
Continuation Pay: To incentivize mid-career service members to stay in the military, the BRS includes a Continuation Pay bonus. It’s a one-time, lump-sum payment offered between 8 to 12 years of service, in exchange for an additional service obligation of four years. The amount varies depending on the service branch and can range from 2.5 to 13 times the monthly basic pay for active-duty personnel or 0.5 to 6 times for reserve members.
Lump-Sum Payment Option: Upon retirement, service members can opt to receive a portion of their retirement pay as a lump-sum payment. They can choose either 25 percent or 50 percent of their future pension payments upfront in exchange for a reduced monthly pension until reaching full retirement age (usually 67). The reduced monthly pension payment is restored to the full amount when they reach full retirement age.
Your installation Personal Financial Management Office can assist you in preparing to make the right choice for you.