U.S. military readies major overhaul of retirement system

[Swordsmyth]

Beginning in January, the military is switching from a traditional pension system, in which retirees receive a monthly check for life based on their pay and years of service, to one that also includes investment accounts, like those commonly available to civilian workers. The new “blended” system is based, in part, on recommendations by the Military Compensation and Retirement Modernization Commission.
The system needed updating, the commission said, because the military’s pension system now leaves the vast majority of service members with no retirement savings when they leave the military. Service members now must serve at least 20 years to get a pension — hence its “20 or nothing” nickname. More than 80 percent of service members leave the military short of that minimum, according to the Defense Department.
The new system still offers a monthly pension, but one calculated using a formula that reduces it by 20 percent, said Michael Meese, a retired Army brigadier general and chief operating officer of the American Armed Forces Mutual Aid Association, a nonprofit group that provides insurance and other financial services to military members. (The commission’s final report noted that while its benefits recommendations weren’t “budget driven,” they would nevertheless “substantially reduce” government spending.)


But service members will also receive contributions to the Thrift Savings Plan, the federal government’s version of an investment-based, 401(k) retirement plan. The military will contribute a minimum of 1 percent of the service member’s pay, even if he or she contributes nothing. The military will also chip inasmuch as 4 percent more in matching contributions, for a maximum government contribution of 5 percent.
(Service members already may contribute to the Thrift Savings Plan, known for its low-cost investment funds, but the military now makes no contributions.)

More at: https://www.seattletimes.com/busines...rement-system/

[oyarde]

So if you put in five percent you are getting 10 percent . Then if you do 20 you are getting about 30 percent ea month of your pre retirement monthly gross ?

[Pauls' Revere]

TSP is operated by Blackrock.

[oyarde]

Let me ask a stupid question . If most do not stay for 20 ( which is correct) how are they saving money with a twenty percent reduction on those twenty percent of people if they instead match everyone ( the other 80 percent ) 5 percent ?

[oyarde]

The military is unlike any other public service . 8 in 10 get out after 4 or 5 or 6 years and get a regular job . Kind of like how you wish congress was .

[oyarde]

By the time Danke is 50 or so I hope they still have enough money for him to go to the VA clinic and see the pecker checker once a year ........

[Pauls' Revere]

Let me ask a stupid question . If most do not stay for 20 ( which is correct) how are they saving money with a twenty percent reduction on those twenty percent of people if they instead match everyone ( the other 80 percent ) 5 percent ?

the minimum will be 1% if they contribute or not. They will match up to 5%. So, those that don't request the 5% limit won't get that match. If they only want to contribute 3% then the Gov will match that. Guess it depends on the number of people willing to contribute at least 5% of pay.

[oyarde]

the minimum will be 1% if they contribute or not. They will match up to 5%. So, those that don't request the 5% limit won't get that match. If they only want to contribute 3% then the Gov will match that. Guess it depends on the number of people willing to contribute at least 5% of pay.

So actually they have no idea that it will save money and it is most likely it will not .LOL

[oyarde]

What they are doing is sending off the avg young guy at 22 after a four yr enlistment with a check for about 1k if he never puts any money in . I guess that gives him his rent deposit on his next apt .

[nikcers]

I wonder how many "fees" are collected and who gets to collect a percentage of every dollar during the investment part of the ponzi scheme? That will be one way to subsidize wall street with military spending I guess.

[oyarde]

Well , looks like Gen. Meese probably put this together . I never meet him but his dad was Reagan's Attorney General . Gen. Meese worked on staff for Petraeus in Afghanistan and Iraq 2007 - 2011 or so . Only thing I saw he had written in 2014 said if defense budgets are cut that money should be used against the deficit and not on social programs .