HANSCOM AIR FORCE BASE, Mass. — Congress made changes to the military retirement system with the passage of the Fiscal Year 2016 National Defense Authorization Act. Service members are encouraged to know if and how the new law will impact their career and retirement.
The military now has two primary retirement systems: the newly established Blended Retirement System and the Legacy Retirement System (high-three). The plan a service member qualifies for depends on when they joined the military or whether they were eligible to opt into the BRS and did so during the enrollment period.
If a service member joined before Jan. 1, 2006, they remained under the legacy retirement system. If a service member joined on or after Jan. 1, 2018, they were automatically enrolled into the new BRS.
The BRS includes: matching Thrift Savings Plan contributions up to a limit; mid-career retention bonuses; and a monthly annuity for life vested after twenty years of service at the rate of two percent per year. Under the BRS, service members who have completed a minimum of two years of service will be vested in their TSP contributions and eligible for at least some retirement benefit.
The legacy system includes a monthly annuity for life vested after twenty years of service at the rate of 2.5 percent per year times the average of the service member’s highest 36 months of basic pay. This plan does not include a mandatory TSP, and the government will not contribute to a TSP if voluntarily established. Service members under this plan must serve for at least 20 years to receive any retirement benefit.
Military retirees are also entitled to benefits such as continued access to certain base facilities, subsidized healthcare insurance and survivor benefit compensation. Service members can also receive information on applying for the Department of Veterans Affairs disability compensation for injuries or illnesses that may have occurred or were aggravated during active duty military service.
Significant life events, such as divorce or the passing of a service member or spouse, can impact the amount of retirement pay the service member or eligible beneficiaries are entitled to receive. For instance, many states consider retirement benefits “property” of the marriage. Therefore depending on the circumstances, those benefits may be divisible in a divorce decree. Additionally, service members should always consider the importance of a will as a means to control the distribution of retirement benefits or other property after their passing. It is crucial that service members have designated correct beneficiaries to receive their property in the event of their death.
For further information or questions regarding the legal impact of divorce, whether or not you need a will, or other significant life events that may impact retirement benefits, please contact the Hanscom Legal Office at 781-225-1410.