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The Blended Retirement System (BRS), also known as the “new military retirement plan,” is a type of military retirement pension offered to eligible service members by the United States government. It’s called the “blended” system because it combines aspects of the traditional military pension system with the Thrift Savings Plan (TSP) — a defined contribution plan similar to a 401(k).
The Blended Retirement System offers complexity compared to past plans. In this article, we’ll cover BRS eligibility and benefits, discuss the differences between the BRS vs. High-36, and BRS pros and cons so that you can navigate your benefits confidently.
Blended Retirement System Eligibility
All servicemembers who entered the military on or after January 1, 2018, are automatically enrolled in the Blended Retirement System. This applies to active duty military and National Guard and Reserves.
Servicemembers who had already retired and those who joined the military before January 1, 2018, were grandfathered into the current military retirement systems (High Pay, High-36, or REDUX).
Many servicemembers had the choice of opting into the Blended Retirement System, however, the last day to opt in was December 31, 2018. Servicemembers who did not opt into the plan by that deadline remained enrolled in the High-36 retirement program.
Why was the Blended Retirement System created?
The Senate Armed Services Committee passed the Blended Retirement System as part of the FY 2016 National Defense Authorization Act (NDAA). The 2016 NDAA featured several major proposals, including military retirement reform, personnel reform, as well as headquarters and management reform. Perhaps the biggest changes were those made to the military retirement system, which had seen little change in the past several decades.
There were several reasons the DoD wanted to change the military retirement system. The annual fixed cost to the government was certainly a concern, as it is growing every year with more retirees and COLA increases.
But there was also a desire to make the military retirement system closer to what people might find in the civilian sector. Many civilian employees have portable retirement plans they can take when they leave their jobs, often in the form of a 401k or similar retirement plan.
Military Retirement System Overview
Before the creation of the Blended Retirement System, prior military retirement plans all relied on a “cliff-vesting” strategy, meaning the benefits operated on an all-or-nothing basis. With the old plan, you were only eligible for lifetime retirement pay if you reached the required 20 years of service or an eligible amount of Guard/Reserve points. You would get nothing if you failed to meet these requirements (barring early military and medical retirees).
A study by the Department of Defense (DoD) found that only 10% of Enlisted personnel and 30% of Officers reach military retirement, while a 2022 study revealed that Officers made up 18% of all military, with Enlisted comprising 82%. This data suggests only 13.6% of all servicemembers make it to military retirement. To put this in perspective, under the old military pension system, 87.4% of servicemembers wouldn’t receive long-term retirement benefits for their military service.
To better compensate servicemembers who don’t complete all 20 years of service, the DoD created the Blended Retirement System. Unlike old military pensions, the Thrift Savings Plan under the BRS is portable and includes contribution matching. Now, members can typically transfer their TSP account and contributions upon leaving the military.
Blended Retirement System vs. Legacy
While it is too late to opt into the Blended Retirement System, comparing it with the Legacy (aka High-36) plan sheds light on how military retirement options have shifted. This comparison helps servicemembers understand their financial choices for the future.
Under the High-36 retirement system, you receive no retirement benefits if you leave before 20 years. If you do make it to military retirement, you receive a pension that is calculated by multiplying your years of service and the average of your 36 highest months of pay by 2.5%. For example, retiring at the minimum of 20 years of service would equate to 50% of the average of your highest 36 months of base pay. The longer you serve past retirement age, the higher the percentage of your base pay you’ll earn, up to a maximum of 102.5%.
In comparison, the BRS offers a much more layered approach to benefits, with access to certain benefits increasing as you continue service. Like the High-36, under BRS, you only get access to retirement pay for life if you stay in for 20 years, and your pension increases the longer you serve. However, the BRS multiplier is 2.0% of your base pay, instead of 2.5% under the High-26 retirement plan.
Let’s take a look at how your pension changes with more service time under the BRS vs. the High-36 plan:
| Years of Service | 20 | 21 | 22 | 23 | 24 | 25 | 30 | 35 | 40 | 21 |
|---|---|---|---|---|---|---|---|---|---|---|
| High-36 | 50% | 52.5% | 55% | 57.5% | 60% | 62.5% | 75% | 87.5% | 100% | 102.5% |
| BRS | 40% | 42% | 44% | 46% | 48% | 50% | 60% | 70% | 80% | 82% |
The reduction in pay under the BRS is a tradeoff for the portability and matching contribution benefit added to the Thrift Savings Plan. While the TSP is available for High-36 retirees, they do not receive contribution matching. These added benefits are an excellent advantage for servicemembers who leave the service before reaching 20 years.
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New Military Retirement Plan Benefits
The Blended Retirement System has introduced significant changes to military retirement benefits. Under the BRS, servicemembers have access to a portable Thrift Savings Plan with matching contributions, a career continuation bonus, and a pension.
Let’s take a look at how BRS benefits accumulate over time.
| Time in Service | BRS Benefit |
|---|---|
| After 60 Days | 1% of your base pay is automatically contributed to your TSP |
| After 1 Year | The DoD matches an additional 4% of your TSP contributions |
| Year 2 | You become fully vested in all TSP earnings |
| Years 8 to 12 | You are eligible for a continuation pay bonus |
| Year 20 | You are eligible to retire. You can choose to receive 40% of base pay for life OR opt into a Lump Sum for an advance of 25% or 50% of your pension |
Now, we’ll review a detailed breakdown of each of the benefits offered as part of the Blended Retirement System.
BRS Pension
The Blended Retirement System’s monthly pay is calculated very similarly to the High-36 retirement plan, except it uses a 2.0% multiplier instead of a 2.5% multiplier, meaning at 20 years of service, your monthly payout is only 40% of your base pay instead of 50%.
To find your estimated retirement pay under BRS, take (years of service) x (2.0%) x (average of your highest 36 months of base pay).
BRS Thrift Savings Plan
The Thrift Savings Plan is not a new military benefit, but under the BRS, servicemembers receive Service Matching contributions from the government.
Once you’ve served for 60 days, 1% of your base pay will automatically be added to your TSP account each month. The DoD provides this 1%, meaning it doesn’t count toward the amount you contribute. After you’ve served two years, you will start receiving “Service Matching Contributions,” which match what you put in up to 4%.
If you opted into the BRS, you began receiving Service Matching Contributions immediately.
| Amount You Contribute | Service Matching Contribution | Automatic Contribution | Total |
| 0% | 0% | 1% | 1% |
| 1% | 1% | 1% | 3% |
| 2% | 2% | 1% | 5% |
| 3% | 3% | 1% | 7% |
| 4% | 3.5% | 1% | 8.5% |
| 5% | 4% | 1% | 10% |
| More than 5% | 4% | 1% | Your % + 5% |
If you joined the service on or after January 1, 2018, you are also automatically enrolled into the TSP lifecycle fund, an investment option that automatically adjusts its investment mix to help optimize earnings before the servicemember’s target retirement date. The lifecycle plan automatically enrolls a certain percentage of your pay toward your TSP each year. If you want, you can opt out of this fund.
Another advantage of the TSP under the Blended Retirement System is that you are vested in (entitled to) your contributions and earnings. However, you must serve two years before all of your earnings–including what the DoD provides–are fully portable.
If you served two full years before opting into the BRS, you were automatically vested in all contributions and earnings.
BRS Continuation Pay Bonus
The Blended Retirement System also offers eligible servicemembers a continuation pay bonus if they re-enlist between years 8 and 12 of service. The servicemember’s Pay Entry Base Date (PEBD) determines their years of eligibility.
Every branch can set its own reenlistment time requirements, but they will all require a minimum commitment of 3 years. The typical requirement is 4 years.
The continuation pay rate also varies by branch. Each branch determines continuation pay rate multipliers based on their specific retention needs, specialty skills, and more.
Generally, active duty continuation pay bonus is between 2.5x to 13x the member’s monthly base pay, while Guard / Reserve continuation pay is between 0.5x to 6x the monthly basic pay of a member of the equivalent pay grade serving on active duty.
Servicemembers can decide whether to receive the continuation pay bonus in a lump sum or as an annual payment during their reenlistment. Like all reenlistment bonuses, the continuation pay would be subject to being recouped if the servicemember fails to finish their enlistment.
BRS Lump Sum Option
Under the Blended Retirement System, retirees have a “lump sum option,” where they can receive a portion of their pension in a lump sum advance once they have met the minimum military retirement service requirements.
Retirees can either choose to receive their retirement pay normally (without a lump sum payout) or select one of two lump sum options:
- Receive a 25% lump sum of the discounted present value of your future retirement payments in exchange for a 50% reduction in monthly retirement pay.
- Receive a 50% lump sum of the discounted present value of future retirement payments in exchange for 75% reduction in monthly retired pay.
If you choose a lump sum payout, you will begin receiving your full retirement payments again once you reach age 67.
To receive a lump sum payment, you must opt into it by a specific deadline.
Lump Sum Election:
- Active duty members have up to 90 days before retirement to elect the lump sum payment.
- National Guard/Reserve members have up to 90 days before receipt of retired pay to elect the lump sum payment.
Remember, active duty retirees are eligible for the lump sum after 20 or more years of service, while National Guard and Reserve retirees are eligible at age 60 – or earlier with creditable active service.
Is the BRS Lump Sum worth it?
Whether or not it’s worth it to opt into the BRS lump sum is a loaded question. Opting into the lump sum transfers investment risk to you, whereas the normal monthly pension payments provide a guaranteed stream of income.
If you’re disciplined with investing and confident in your ability to manage the lump sum wisely, it could potentially grow more over time compared to receiving monthly pension payments. The lump sum could also be helpful if you have immediate financial needs like paying off debts or helping you transition to the civilian sector.
Consider meeting with a financial advisor to fully consider the tax implications and opportunity cost of opting into the lump sum.
Pros and Cons of the Blended Retirement System
For review, let’s discuss some of the pros and cons of the BRS:
| BRS Pros | BRS Cons |
| Increased Access to Retirement Benefits | Reduced Pension |
| TSP Matching Contributions + Portability | Variability of the TSP |
| Continuation Pay Bonus & Lump Sum Option | Complexity |
Increased Access to Benefits vs. Reduced Pension
In general, I’m not a fan when military benefits get reduced. Primarily because each reduction makes it easier to repeat in the future, but there is a lot to like here, particularly when it comes to helping the entire military population, not just the 13.6% who stay in long enough to retire.
I don’t want to take anything away from anyone who served the full 20 years – I have a lot of respect for all of you! But many served for 12, 14, 16, or 18 years and couldn’t complete the full 20. They were sent on their way with whatever they had in savings and whatever they could put into their TSP or their own investments.
Finally, the reduced pension isn’t a catastrophic reduction. Yes, 40% of your base pay is a lot less than 50%. Servicemembers who contribute enough to earn the 5% matching agency contributions will have saved at least 10% of their base pay throughout their careers. Depending on how the markets perform, the compounding effects of time may help erase the gap between the two pension plans.
TSP Matching Contributions & Portability vs. Variability
The BRS gives members a greater incentive to save money in their Thrift Savings Plan since the matching funds equate to receiving free money.
The DoD estimates that at least 85% of servicemembers will receive some retirement benefits under the BRS. The difference comes from the Thrift Savings Plan contributions made by the government, which are portable.
The biggest question mark around this new plan surrounds the variable nature of the TSP.
Trading a fixed monthly payment for a lower fixed payment and some money in your TSP is risky because we can’t predict future returns. It’s impossible to accurately calculate the future value of this plan compared to the current plan. However, that is a problem faced by most of the population and is certainly not unique to military members.
Of course, that’s the big “what if”? We all know many people won’t save the full amount, even if they receive matching contributions, and we have no way of knowing what the markets will return. There is also a big difference between having a fixed pension for life and having some money in the bank that needs to be managed and withdrawn as needed (suddenly, you have to consider tax implications, the need to balance a portfolio, etc.).
Continuation Pay Bonus & Lump Sum Option vs. Complexity
The continuation pay bonus is also an incentive to remain in the service and is a nice bonus for those already planning on staying in the military. That, plus the lump sum option, are pretty strong incentives to stay in longer.
However, adding these benefits also introduces complexity. Maximizing your BRS benefits can mean the difference between tens of thousands of dollars, but effective management requires basic investment knowledge. Understanding factors like contribution rates, investment options, and the impact of time on your investments is crucial.
Additionally, consider seeking guidance from financial advisors or utilizing resources provided by your branch to make informed decisions tailored to your financial goals.
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Brian Starr says
My other question was what enlisted traditional reservist that does 12 drills and 15 days of annual tour could possibly contribute $18,500 a year when they don’t make that in a year?