Staying Put

New retirement system proving less than popular with those eligible to switch from the legacy program
 

Most service members don’t think much of the military’s new retirement program. That’s the message more than 1.6 million eligible U.S. military personnel delivered after 11 months of their 12-month window to enroll in the new Blended Retirement System (BRS). 

It also may be that most are at an age when they simply don’t think much about retirement. 

Either way, less than 20 percent of those eligible had opted from the old retirement system into BRS as of last month, according to the Defense Department. The deadline to “opt-in” is Dec. 31. 

It's a personal decision and everyone has their own situation and perspective.

Capt. Bonnie Blakely, Massachusetts Air National Guard

The figure was even lower among eligible National Guardsmen ― only 8.6 percent of roughly 90,000 in the Air Guard and just 6.6 percent of some 298,000 in the Army Guard.  

The low opt-in rate surprises many observers, who believe most troops likely would be better off financially in BRS.

The legacy program offers a lifetime monthly pension to those who spend at least 20 years in uniform, starting upon retirement for active-duty troops and at age 60 for Guardsmen and Reservists. But 81 percent of service members, including 86 percent in the reserve-component personnel, don’t serve that long and leave the military without any retirement benefits. 

Even most officers (47 percent) don’t reach 20 years. 

Congress wanted to extend retirement benefits to more service members and created BRS in the 2016 National Defense Authorization Act. NGAUS was a proponent. The blended system combines a pension for those who serve 20 years and regular government contributions to a 4019k)-style Thrift Savings Plan. 

Troops have multiple investment options within their TSP and keep what’s there no matter how long they serve. BRS also offers a one-time payout known as continuation pay at 12 years, with a commitment to serve an additional four years. And retirees under BRS can opt for a partial lump-sum payout when they begin collecting their pensions.  

The downside is a smaller pension. It’s 20 percent less, which makes the old program more lucrative for almost all who serve 20 years. 

BRS began this year. All new accessions are automatically enrolled. Those service members with more than 12 years of active duty or traditional Guardsmen and Reservists with more than 4,320 retirement points as of Dec. 31, 2017, stay in the legacy program. The 1.6 million service members with less service have their choice of the two systems. 

Opting in to BRS requires Guardsmen to do something — enrolling on the MyPay website. Whereas remaining in the legacy system requires doing nothing. That’s because the Army and Air Force don’t require their personnel to take any steps if they’re going to stay with the legacy retirement system. 

The Marine Corps is the only service that makes its members register their decisions regardless of whether they opt in to the BRS or stay with the legacy system. Perhaps not coincidently, 36.6 percent of Marines had opted in to the BRS as of Sept. 30, a highest percentage of any of the other services.

The Air Force’s opt-in rate was 16.9 percent while the Army was at 10.5 percent, according to DoD figures.

Pentagon officials have consistently expressed no disappointment in the overall opt-in rate.

“The department didn’t have a target or goal for opt-in,” said Craig Ekman, a member of the Army Guard’s retirement services and transition policy team, last month. “We have stated many times through all of our communications with service members that this is a very individual choice.”  

Nevertheless, the low opt-in rate begs several questions: Is BRS as unpopular as the opt-in rate suggests? Are many troops procrastinating? Are a lot of them still uninformed or unconcerned about BRS?
    
It seems unlikely that many troops are completely uninformed. DoD mounted a concerted effort this year to ensure that all commands inform all eligible service members on their options and established a network of personal financial counselors to help. And an online opt-in course has been mandatory for those eligible to switch to BRS.

Massachusetts Air National Guard Capt. Bonnie Blakely was among those weighing their options in early November. She has served for nine years since joining in 2009 and earning her commission in 2014. 

“I think other service members in a similar situation to myself have a lot to consider,” she said during a break in a weeklong, Massachusetts-wide, Vigilant Guard exercise. “The BRS option is a great way for members who think they’ll serve less than 20 years to guarantee that they’ll still earn some retirement benefits. It’s a personal decision, and everyone has their own situation and perspective.” 

Others at the exercise had considered and decided.

Texas Army Guard Sgt. Kyle Burns, who’s not sure how long he’ll serve, opted in early this year  to begin getting the biggest bang for his 5 percent contribution to his TSP. With the full government match, he is in effect saving the equivalent of 10 percent of his Guard pay.

But the legacy program was a no-brainer for Vermont Army Guard Capt. J. Scott Detweiler.  

“I just celebrated my 13th anniversary, so to speak, so I’m in it for at least 20 years,” he said. “I mean that’s what we kind of signed up to do at the time, right? That was the only system in play, to do the 20 years and earn our retirement. It would be quite the pivot to turn from that. And for many of [my peers] financially, it just makes more sense to complete it.”

But there were some who have not given retirement much consideration.  
    
“It’s harder for somebody who is young,” said one financial counselor who works with Guardsmen but asked not to be identified due to the personal nature of the job. “I try to get them to understand how time seems to go much, much faster and why it’s important to start thinking about retirement, do the math, and make a good decision.”

At least one Pentagon official believes many Guardsmen will conclude their decision-making this month, and the result will be a spike in the number opting in to BRS. 

"December is a common time for this kind of training to take place within Guard units," Jeri Busch, who directs military compensation in the DoD Office of the Under Secretary of Defense for Personnel and Readiness, told Pentagon reporters at a Nov. 28 roundtable. "It was very effective last year when they were doing the mandatory training and ... we think it will be effective this year in reminding Guard members about the opt-in decision."
    
Bob Haskell is a retired Maine Army National Guard master sergeant and a freelance journalist in Falmouth, Mass. He can be contacted at magazine@ngaus.org.