Blended Retirement System (BRS)
January 1, 2018 the military introduced the newest approach for providing retirement benefits for service members. In this article we will discuss everything you need to know regarding the BRS.
Eligibility
There are three eligibility groups in which you could fall into:
- Legacy System
- Automatic BRS
- Opt-In Eligibility
Legacy System
If you served active duty for 12 or more years, or obtained 4,320 points in the Guard or Reserves, as of December 21, 2017, nothing changes with your retirement plan. You are grandfathered into the original Legacy System (High-3).
Automatic BRS
If you joined the military on, or after, January 1, 2018 you are automatically enrolled in the BRS. This is your retirement system.
Opt-In Eligibility
If, as of December 31, 2017, you are active duty with less than 12 years of service, or obtained less than 4,320 points in the Guard or Reserves you can choose to Opt-In to the Blended Retirement System. The Opt-In deadline is December 31, 2018. If you choose to do nothing, or not opt-in, you will remain on the Legacy System.
Cadets and Midshipmen who were attending a service academy as of December 31, 2017 are grandfathered under the legacy retirement system and will have the option to opt into BRS upon commissioning. ROTC cadets and Midshipmen have the same option as long as they signed their “contract” on or prior to December 31, 2017. Each individual service member has a deadline, which is 30 days after their first day of duty following commissioning.
Main Components of BRS
- TSP Contributions from your branch of service
- Continuation Pay
- Pension
- Lump Sum Retirement Options
TSP Contributions
Based on the chart above, the BRS includes automatic government contributions of 1 percent of basic pay and government matching contributions of up to an additional 4 percent of basic pay to a service member’s TSP account. If you opt in to the BRS, your first step should be ensuring your TSP contributions are entered and up-to-date. Members who opt into BRS are not automatically enrolled at a certain TSP contribution percentage — the default 3 percent contribution rule ONLY applies to members who are automatically enrolled in BRS, not those who choose to opt-in.
Continuation Pay
Continuation Pay is a direct cash payout, like a bonus, as a way to encourage Service members to continue serving in the Uniformed Services. Continuation Pay is a lump sum payment made between 8-12 years of service in exchange for agreeing to serve no less than 3 additional years. Active component service members (including Active Guard Reserve (AGR) and Full Time Support (FTS)) enrolled in the BRS will be eligible for a cash incentive of 2.5 to 13 times their regular monthly basic pay. Reserve component members will be eligible for 0.5 to 6 times their monthly basic pay (as if serving on active duty). The set amount and date of continuation pay is set by the branch of service as deemed appropriate. Continuation pay in this form in the Legacy System.
BRS Pension (Retirement Annuity)
For service members who retire after at least 20 years of service (20 qualifying years for the National Guard and Reserve), their retirement remains predominantly a defined benefit in which the service member will get monthly retired pay. Under BRS, the service member’s monthly retired pay will be calculated with a 2.0 percent multiplier (in lieu of the 2.5 percent under the legacy High-3 system), times the average of the service member’s highest 36 months of basic pay.
Lump Sum Retirement Options
The lump sum provision of BRS gives service members choices at retirement. A service member may choose to receive either 25 percent or 50 percent of the discounted present value of a portion of their future retired pay, in exchange for reduced monthly retired pay. Monthly retired pay returns to the full amount when the service member reaches full Social Security retirement age, which for most is age 67. No such lump sum option exists under the legacy, High-3 military retirement system.
