Blended Retirement system

[epidural man]

Any thoughts on the new law signed about the blended retirement system?


The current flyer says that if you started before 2006, you are automatically in the old system. I'm curious if one has the option to get into the new system after 2018. I think I'm in a situation that might make that better for me.

However, there are lots of questions that remain - but there doesn't seem to be much written about the subject.

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[pgg]

I for one can't wait for the mandatory

refresher financial literacy courses throughout troops’ careers: at duty station changes, shortly after promotions, following “life events” like marriage or the birth of a child, and before and after deployments.

1% of base salary to TSP by the gov
Up to a 5% match on top of that
20 year pension reduced to 2% per year of service (down from 2.5%)

A bad deal for lifers, of course.

A better deal for the guys who do a single enlistment and get out. Not sure I'd call it good, but 1% plus a 5% match is better than 0%.

I struggle to imagine a scenario in which you'd come out ahead with a voluntary move to the new system.

 

[Unlucky Asian]

How would HPSP work with the new system? Do they still have to wait until 20 years to get the +4 years? If so, it's making the HSCP sound better for people who would want the dinero from the retirement without doing all 20 years.

Edit: Whoops, thought for some reason that the new system would allow you to cash out any % retirement pay depending on your years instead of doing full 20, except at reduced multiplier. Probably not gonna see more than the USUHS guys stuck under the super long commitments doing all 20.

 

[backrow]

How would HSPS work with the new system? Do they still have to wait until 20 years to get the +4 years? If so, it's making the HSCP sound better for people who would want the dinero from the retirement without doing all 20 years.

HPSP does not get the 4 at 20, that is unique to USUHS.

 

[Gastrapathy]

I for one can't wait for the mandatory

1% of base salary to TSP by the gov
Up to a 5% match on top of that
20 year pension reduced to 2% per year of service (down from 2.5%)

A bad deal for lifers, of course.

A better deal for the guys who do a single enlistment and get out. Not sure I'd call it good, but 1% plus a 5% match is better than 0%.

I struggle to imagine a scenario in which you'd come out ahead with a voluntary move to the new system.

The goal was to save money so no surprise. The effect on physician retention was not part of their thinking but this will not help.

 

[epidural man]

I for one can't wait for the mandatory

1% of base salary to TSP by the gov
Up to a 5% match on top of that
20 year pension reduced to 2% per year of service (down from 2.5%)

A bad deal for lifers, of course.

A better deal for the guys who do a single enlistment and get out. Not sure I'd call it good, but 1% plus a 5% match is better than 0%.

I struggle to imagine a scenario in which you'd come out ahead with a voluntary move to the new system.

Well it depends on how they deal with giving money to an ex-spouse. If I can convert some of my retirement money to TSP and matching - that wouldn't go to her, that may be a better scenario.

 

[68PGunner]

There's no reason for any HPSP docs to extend due to this new retirement plan. Our military leadership and current obligated docs will feel it when the next war hits the fan.

 

[jabreal00]

I for one can't wait for the mandatory

1% of base salary to TSP by the gov
Up to a 5% match on top of that
20 year pension reduced to 2% per year of service (down from 2.5%)

A bad deal for lifers, of course.

A better deal for the guys who do a single enlistment and get out. Not sure I'd call it good, but 1% plus a 5% match is better than 0%.

I struggle to imagine a scenario in which you'd come out ahead with a voluntary move to the new system.

Of course this is not a better deal for those who grind out 20 years for retirement with the old system. With the current fiscal issues, the old system was the low hanging fruit in this era of austerity. The vast majority do not stick around for 20 years whether it's medical or the line side. This is a better deal for those who stay 3-19 years. Every other federal or civil service branch of the government matches. My brother is in the foreign service and their package is much nicer than the military. They get match, pension after 10 years (prorated) in service (though I think at age 59 or 60). His healthcare package is great. I'll get out after 11 years and have squat to show for my time in service apart from my contributions to my TSP and some coins and ribbons I've accumulated over the years.

 

[pgg]

Don't get me wrong; I think it's a good and appropriate change, generally speaking. Giving 1/2 pay to people for 40 or 50 years after a 20 year stint in the line was really quite generous. My father retired an E9 in 1971 and was paid FAR more in retirement than ever earned on AD, even accounting for inflation. Knocking that down to 40% pay at 20 isn't unreasonable.

But the TSP match is peanuts, next to nothing. Better than nothing, but only just.

It's good that the short-timers get something, but let's not get carried away with excitement over 1% plus a 5% TSP match. For your average servicemember, the government will only be tossing a couple thousand dollars per year into TSP. Even the mid-career O4-5 is only going to get an extra $5K/year or so from the government. The O5 >18 will get under $6K to TSP from the government.

For an entire 20 year career, the 2018+ crowd is probably looking at $40-70K in government contributions to their TSP. Get out at 10, and you'll take away far less than 1/2 that. That's like an extra $100-200/month in 4% SWR retirement withdrawals. Yippee?

If the 2018+ plan was the deal when I made my stay/go decision, I probably wouldn't have stayed.

 

[pgg]

Well it depends on how they deal with giving money to an ex-spouse. If I can convert some of my retirement money to TSP and matching - that wouldn't go to her, that may be a better scenario.

Heh, you should stay for 30+ years then. Defer collection as long as posible. She might keel over and die of natural causes before collecting anything!

 

[Unlucky Asian]

Since this is a new retirement system, does this still allow you to say that you are retired? What they send you off with makes me think more of an honorable discharge.

 

[epidural man]

Since this is a new retirement system, does this still allow you to say that you are retired? What they send you off with makes me think more of an honorable discharge.

This is a great question. And what about health benefits....

 

[Mace1370]

A few questions I have that I cannot find the answer to with a quick google search:

1) Lets say I am currently active duty and have 8 years of service when the new retirement system comes online. If I choose to switch into it, do I get anything for those 8 years? Or does the matching and 1% contributions only apply to the years once I switch?

2) I saw some reference to a mini-pension at 12 years of service, but now I can't find anything about it when looking through articles. Is this a thing or did some reporter make it up?

 

[Unlucky Asian]

I hear about lump sum continuation pay for staying after 12 years, but it's not a pension.

 

[JMK16]

They haven't worked out all the details but overall this is what was written about:
starting with accessions FY2018 automatic enrollment into into TSP
-1 to 1.5% pay is automatically placed into this
-Government matches up to 5% (no word on if this is every year or if it will go up or down as time progresses)
-Possible "bonus" at 10-12 years (again no firm answers on amount and if this will come out of TSP, maybe no penalty early withdrawal, or if it is in addition to TSP)
-Ability to rollover to another workplace if/when you leave the military

I was just selected (71A) and anyone in before dec 31 2016 will be "grandfathered in" to the old pension system (with the reduction from 2.5% to 2% per year) if you want to change over there will be a limited period to do so in 2018. They did not indicate they will contribute on a retroactive basis (if you dumped 8 years worth of 5% you salary they would match) they expect people with less then 10 years service will willing switch.

Honestly, I don't think they thought about the medical, research, and law professionals with this move... the pension plan was the only real benefit (They do not offer 71A/B any bonus or additional pay)... similar to M.D.s, PhDs in the hard sciences tend to be in their 30's before they are done postdoctoral fellowships and retirement, student loans, and other benefits are of concern.

I don't know if they will do it in this case, but when the government CIV jobs moved to a mainly 401K format they allowed some people to do a mix of both (I'm not sure what the stipulations were) but they were allowed to keep pension going and enroll into the new retirement system also. Either way they won't publish all the details of the changes for several months, they are also implementing a finance mini-course to explain how things will work (should be interesting teaching 18 year old enlisted about diversifying retirement portfolio's.... know i didn't care that much at 18

 

[j4pac]

My question is whether or not this is truly a 401-k? Does it's value fluctuate with the market?

I personally think that it sucks that the military doesn't have a matching 401-k system. That's automatically a 100% return on your investment. As of right now, servicemembers who want to see their money grow and beat inflation must go to the civilian sector where there is no match of contribution and fees. I'd be all for taking less of a pension if I had the ability to improve my portfolio.

 

[pgg]

My question is whether or not this is truly a 401-k? Does it's value fluctuate with the market?

I personally think that it sucks that the military doesn't have a matching 401-k system. That's automatically a 100% return on your investment. As of right now, servicemembers who want to see their money grow and beat inflation must go to the civilian sector where there is no match of contribution and fees. I'd be all for taking less of a pension if I had the ability to improve my portfolio.

What do you mean? Do you know what TSP is?

New system will be 1% plus up to 5% matching into TSP ... you know, the G, F, C, S, I, and L funds. All of those except G fluctuate with the markets they're invested in.

TSP fees are the lowest in the industry. On the fixed income side, G is something unique and unobtainable anywhere else. The main drawback to TSP is that the international equity fund doesn't include emerging markets. You could also criticize it for not having REITs, commodities, sector funds, or individual stocks.

What improvement, specifically, are you looking for?

 

[pgg]

should be interesting teaching 18 year old enlisted about diversifying retirement portfolio's.... know i didn't care that much at 18

Me neither. Youth is wasted on the young.

 

[j4pac]

What do you mean? Do you know what TSP is?

New system will be 1% plus up to 5% matching into TSP ... you know, the G, F, C, S, I, and L funds. All of those except G fluctuate with the markets they're invested in.

TSP fees are the lowest in the industry. On the fixed income side, G is something unique and unobtainable anywhere else. The main drawback to TSP is that the international equity fund doesn't include emerging markets. You could also criticize it for not having REITs, commodities, sector funds, or individual stocks.

What improvement, specifically, are you looking for?

Maybe I didn't communicate as well as I should have. I'm not bashing TSP...it's certainly better than nothing...and may even be better than most IRAs.

But there the inability for an employer match sucks. It's done for practically EVERY legitimate business in the civilized world...just not the military. I'm glad to see that this is being done...because I think that it really could be an education tool to our servicemembers. A TSP with a match up to 5%? Absolutely...sign me up.

 

[Incis0r]

A TSP with a match up to 5%? Absolutely...sign me up.

BTW, it's up to 5% of your basic pay, not total compensation.

 

[pgg]

Maybe I'm misunderstanding. It seems we're conflating two completely different issues.

1) Employer match.

2) What TSP is and isn't.


I have long wished that the military would match TSP contributions to some degree. (Who wouldn't want free money?) But I can see why they haven't, given the pension at 20 years. And I have no expectation that they ever will, for those of us grandfathered into the old retirement plan.

When you asked if its value fluctuated with the market ... it suggested that you don't really know what TSP is. I wasn't sure and am still not sure where you're going with this. I don't know why you're comparing TSP with IRAs; the difference doesn't seem to be relevant in the context of the discussion. They're both tax vehicles for retirement investments.

TSP is the military 401(k). It's nothing more than a tax advantaged account with the option of investing in a special class of US treasuries (G), a US bond index fund (F), a S&P 500 index fund (C), a US small cap stock index fund (S), and/or an international (non-emerging markets) stock index fund (I).

 

[j4pac]

BTW, it's up to 5% of your basic pay, not total compensation.

I know it is...which sucks for physicians...but is still better than the current plan.

 

[Ziehl-Neelsen]

The main drawback to TSP is that the international equity fund doesn't include emerging markets.

Need 'dat Beta, to get 'dat Alpha.

I always find it interesting when Jim Dahle talks on his website about the financial train-wreck physicians he interacts with as the WCI. That hasn't been my experience at all. Most of my physician friends (and I daresay a good number of the posters on this board) are pretty financially savvy. Self selection bias I guess. All these debt-averse military physicians "rubbing two dragons together to breed a third" like Petyr Baelish...

 

[Red Lobster Actual]

"rubbing two dragons together to breed a third" like Petyr Baelish

He was also quite the entrepreneur of his time.

 

[JMK16]

this article clarifies a little bit and talks about a 401K style TSP... which is what I was referring to, not the current TSP that is offered. militarytimes.com/story/military/benefits/retirement/2015/11/23/reiterment-changes-choices/76049640/

 

[deleted480308]

so it talks about lowering the pension calculation too.....does it go retroactive on me or do I get to "retire" at the same calculations I entered under?

also....does being Guard change anyone's thoughts on this? Does that make the TSP option better? (I'm almost definitely in for 20)

 

[pgg]

No retroactive changes. You may be able to opt in to the new system, but you won't be forced to.

 

[TheEarDoc]

Me thinks the sucking sound of the vacuum created by all the professional officers leaving service after their financial obligations are up will be deafening to the brass and the lawmakers and this will change or some other incentive will be offered.

If Uncle Sam ain't offering tuition repayment/loan assistance for doctorate level professionals when they are paying them far less than the private sector and now they are taking away one of the few perks of military service (the retirement), then they are going to have to sweeten the pot somehow when war comes round again or they will be screwed.

Being in the federal system using the TSP system. It's not great, but it's not much different than most private med centers and universities I've worked in.

 

[pgg]

Here's a nice blog post on the new system:

http://the-military-guide.com/2015/12/17/should-you-choose-the-military-blended-retirement-system/

That particular author has some other good articles as well.

 

[pusher]

Bad luck to me. I have 11 year prior service and my plan was to go back in 2019 when I finish my residency. Even if my prior service counted for retirement, I don't think the military will offer me the old retirement system.

 

[deleted480308]

Bad luck to me. I have 11 year prior service and my plan was to go back in 2019 when I finish my residency. Even if my prior service counted for retirement, I don't think the military will offer me the old retirement system.

if you know you are going back in active, use the FAP

 

[pusher]

if you know you are going back in active, use the FAP

Thanks. I am thinking about that too, but still no guarantee. I may wait until 2018 and decide later.

 

[TheGoose]

So those of us currently grandfathered in still can retire at 2.5% or did that get dropped down to 2.0%? Sorry conflicting posts above

 

[Red Lobster Actual]

So those of us currently grandfathered in still can retire at 2.5% or did that get dropped down to 2.0%? Sorry conflicting posts above

If grandfathered in, still at 2.5%

 

[mefor]

if you know you are going back in active, use the FAP

If you are at med school with HPSP or residency with FAP by 2018, I don't think you will be grandfathered with the old system, but I may be wrong.

 

[deleted480308]

If you are at med school with HPSP or residency with FAP by 2018, I don't think you will be grandfathered with the old system, but I may be wrong.

If you are "in" right now you are grandfathered. This is not retroactive from my understanding.....that would cause a near revolt

 

[soapieMD]

Has anyone received their TSP contribution after opting into the BRS yet? I opted in and my January LES does not reflect any sort of match. Thanks!

 

[militaryPHYS]

Seems like those who opted in on or before January 3 or 4 are seeing the match on their January LES. I know someone who opted in on 08JAN and it was not reflected on the current LES. Waiting to hear back from mypay regarding back pay for match. It was my understanding that if someone opted in before 15JAN they would receive the January match.

 

[Matthew9Thirtyfive]

Maybe you folks can answer a question that came up on the drive to WR over break. If you opt in, what happens if you are eligible for the retention bonus while you are in school/training? For example, many of us will hit 12 years during residency. Do we lose out on that, or do we just wait until we are eligible to reup?

 

[Mace1370]

Seems like those who opted in on or before January 3 or 4 are seeing the match on their January LES. I know someone who opted in on 08JAN and it was not reflected on the current LES. Waiting to hear back from mypay regarding back pay for match. It was my understanding that if someone opted in before 15JAN they would receive the January match.

I opted in on 03Jan17 and I don't see anything on my LES. I received 2 emails on 26Jan17 stating that my "Agency Matching Started" and "Agency Automatic Contributions Started." I assume I will see something on the next LES.

 

[Matthew9Thirtyfive]

I opted in on 03Jan17 and I don't see anything on my LES. I received 2 emails on 26Jan17 stating that my "Agency Matching Started" and "Agency Automatic Contributions Started." I assume I will see something on the next LES.

I keep meaning to opt in. Gonna do it now that I’m thinking about it.