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Pay and Benefits

Blended Retirement

Breaking down options

For anyone who has ever served 16 years in the military and left without a retirement plan, the new blended retirement option being offered to Sailors beginning Jan. 1, 2017 would have been a huge help.

Bottom line up front: If you have more than 12 years of service by Jan. 1, 2018, you don't have the option to switch. If you have less than 12 years at that point, then this new blended retirement system might be for you.

The new plan will be mandatory for new Sailors joining the Navy. However, Sailors who are currently serving will be grandfathered into the current retirement system.

This blended retirement system offers several things: 1) matched TSP contributions up to 5 percent; 2) 40 percent of your base pay at 20 years plus a 2 percent increase each additional year you serve up to 30; 3) a bonus of two and a half months of pay at mid-career if you agree to obligate for four more years; and 4) a lump sum option at retirement.

So whether a Sailor does 20 years, or just eight, he or she leaves with SOMETHING.

Under the old system Sailors receive 50 percent of their base pay at 20 years and an additional 2.5 percent per year for every year they serve past 20. So that's 50 percent at 20 years, and 75 percent at 30 years.

The new system goes into effect Jan. 1, 2018, and anyone who has less than 12 years of service as of that date will be able to opt in to the program from Jan. 1, 2017 till the program officially starts in 2018. Sailors have from now until Jan. 1, 2017 to research and train on the new system to see if it a good option.

There are three training courses under development for new accessions who will be automatically enrolled in the new system. However, for those Sailors who are considering this blended option, training is available now on Joint Knowledge online (http://jko.jten.mil/courses/brs/leader_training/Launch_Course.html). Although this training is mostly geared toward leaders and financial specialists, anyone can take the training. It discusses the basics of the new system and includes examples and other information to help Sailors make informed decisions. There is also an App being developed that will help Sailors run the numbers. Additionally, commands without sufficient bandwidth can request CDs and training scripts.

"Our goal with the training is to help you understand all the details," said Chief of Naval Personnel Vice Adm. Robert Burke. "It's going to be a great option for some people, but may be the best option for others. We just want Sailors going into it with eyes wide open."

Here are five things you need to know about the new system:

1. Sailors who are currently serving and do nothing will remain under the old system. You can opt-in on the DFAS/MYPAY website starting next year.

2. After two months of service, the government automatically starts putting 1 percent of a Sailor's base pay into their individual's thrift savings plan. Individuals are free to make their own contributions as well, and will see a matching of their contributions up to 4 percent at the start of their third year of service. "At three years you could be putting in 5 percent of your base pay and the government will contribute 5 percent. So, 10 percent of your base pay would go into TSP," said Burke. "Individuals are fully vested at three years, meaning it's theirs to keep when they leave."

3. "If you get out before 20 years, you still get whatever you invested in that thrift savings plan, so you still get something, it won't be huge, but it's something, and it's better than nothing," said Burke.

4. There will be a mid-career bonus of 2.5 months salary when you obligate for another four years. This is an incentive to keep Sailors in the Navy.

5. There is a lump sum option at 20. So instead of taking monthly payments of 40 percent plus whatever your thrift savings plan adds in, you could decide you want 25 or 50 percent of your retirement in a lump sum. Calculations will be done to determine what an individual would receive.

A key thing for Sailors to remember is under the new program they have more options for establishing a savings plan.

For more information visit the links below:
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