Posted on Jul 2, 2016
The Pentagon moves to set troops straight on its new military retirement plan
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The Defense Department has begun to educate military leaders, rank-and-file service members and their families about the coming changes to its retirement plan, a months-long effort to provide personnel with enough financial literacy to confidently, competently navigate this new "blended" system.
The first of four programs, unveiled Wednesday at the Pentagon, is called the “Leader Course.” It’s available to anyone and doesn’t require access with a Common Access Card. It provides an introduction to and an overview of the new blended retirement system, with information about who is affected, and the options available to them. A link to the information is on the Joint Knowledge Online site; it can also be found through MilitaryOneSource.mil.
Deployed service members’ commands will receive CD-ROM courses.
The training program will begin in earnest this summer. The Army, for example, has a public relations campaign to inform soldiers and family members what will happen, said Lt. Col. Steve Hanson, allowances branch chief for the Army G1, and the Army’s representative for implementation of blended retirement system education. “It’s our responsibility to arm them with information so they can make the proper decision for themselves,” Hanson said.
“Today, with the release of the Blended Retirement System leader course, we have the opportunity to put the facts out there in an environment where leaders can have the information to make sure they are prepared to answer any questions they might have from their troops,” said Wayne Boswell, the Defense Department’s director of financial readinesss. Since the enactment of the law last year that changed the retirement system, he said, “there has been speculation, rumors, information out there about the blended retirement system’s potential impact.”
“It’s probably a major understatement to say it’s a big change for our service members,” said Andrew R. Corso, assistant director of DoD’s office of military compensation.
The new retirement system will mean smaller pension checks but will includes matching cash contributions to service members’ Thrift Savings Plan accounts — much like a 401(k) plans offered in the private sector. This means that for the first time, troops who leave the military before 20 years of service will have some limited retirement benefits to take with them.
The critical, more detailed course for those who are most affected by the change — those with fewer than 12 years of service by Dec. 31, 2017 — will be rolled out in January. They have the option of switching to the new retirement system or staying with the old. The course is still in development, but will include a tool that lets troops plug in their own data to help them make their decision. Troops will be able to enter numbers such as varying retirement dates and Thrift Savings Plan rates of contribution to determine which choice would be better for them in the long term.
“The calculator will be the heartbeat of the course, to personalize the information and enable them to make decisions,” Boswell said.
No one has to make a decision about this in 2016 or 2017. But in 2018, service members in the active and reserve components who entered the military after Jan. 1, 2006 — about 1.6 million people — will have to decide whether to stay with the current retirement system or move to the new retirement system signed into law in November. Troops can make the choice beginning Jan. 1, 2018; the deadline for making the decision is Dec. 31, 2018. It’s an “opt-in” situation for the troops in this category. If they don’t opt in to the new situation, they will automatically stay in the old retirement system. Those with more than 12 years of service by the beginning of 2018 will automatically remain in the current retirement system.
The courses provide education materials, and no one in the military community — not supervisors, not personal financial managers — is going to tell a service member which choice they should make, Boswell said.
"We don’t want them to be in an advisory role, where they advise whether to or not to opt in,” he said, but to provide facts about the changes, lifelong financial preparedness, lifelong financial readiness, investing, compound interest and other information that service members and families need to understand the decision's impact.
The leader course describes various service members' circumstances and offers questions they should consider. In one scenario, the Marine corporal who joined the Corps in 2010 should ask himself how long he intends to stay in the military; whether he would join the Reserve and stay until completing 20 years; how much will his Thrift Savings Plan contributions grow until retirement; how long he will have to continue investing and receive the benefit of government contributions; and how a possible future spouse and children would factor in to his retirement plans.
DoD and the services are also providing the leader course information to others on installations, such as bank and credit union staffs, professional financial managers and professional financial counselors, Boswell said.
A “train the trainer” course is coming in September for personal financial managers to help them provide additional facts to service members and family members who need more information to make their decision.
DoD officials do not recommend one option over the other, Corso and Boswell said. “We want to make sure service members and families have the information, and it’s up to them to make the determination what’s in their best interest. Everybody’s lifelong career plans, and financial plans are different. This is a very personal decision folks are going to have to make in terms of where they see themselves going in the future. Forcing a younger population to take a look at that and make some of those decisions is a good thing.”
Although Congress is considering come changes to the new retirement benefit this year, the messages in course won't be significantly affected, Corso said. “We were conscious of some of the areas where there may still be some discussion and the training talks about this, with the caveat for potential future modifications if necessary.”
The first of four programs, unveiled Wednesday at the Pentagon, is called the “Leader Course.” It’s available to anyone and doesn’t require access with a Common Access Card. It provides an introduction to and an overview of the new blended retirement system, with information about who is affected, and the options available to them. A link to the information is on the Joint Knowledge Online site; it can also be found through MilitaryOneSource.mil.
Deployed service members’ commands will receive CD-ROM courses.
The training program will begin in earnest this summer. The Army, for example, has a public relations campaign to inform soldiers and family members what will happen, said Lt. Col. Steve Hanson, allowances branch chief for the Army G1, and the Army’s representative for implementation of blended retirement system education. “It’s our responsibility to arm them with information so they can make the proper decision for themselves,” Hanson said.
“Today, with the release of the Blended Retirement System leader course, we have the opportunity to put the facts out there in an environment where leaders can have the information to make sure they are prepared to answer any questions they might have from their troops,” said Wayne Boswell, the Defense Department’s director of financial readinesss. Since the enactment of the law last year that changed the retirement system, he said, “there has been speculation, rumors, information out there about the blended retirement system’s potential impact.”
“It’s probably a major understatement to say it’s a big change for our service members,” said Andrew R. Corso, assistant director of DoD’s office of military compensation.
The new retirement system will mean smaller pension checks but will includes matching cash contributions to service members’ Thrift Savings Plan accounts — much like a 401(k) plans offered in the private sector. This means that for the first time, troops who leave the military before 20 years of service will have some limited retirement benefits to take with them.
The critical, more detailed course for those who are most affected by the change — those with fewer than 12 years of service by Dec. 31, 2017 — will be rolled out in January. They have the option of switching to the new retirement system or staying with the old. The course is still in development, but will include a tool that lets troops plug in their own data to help them make their decision. Troops will be able to enter numbers such as varying retirement dates and Thrift Savings Plan rates of contribution to determine which choice would be better for them in the long term.
“The calculator will be the heartbeat of the course, to personalize the information and enable them to make decisions,” Boswell said.
No one has to make a decision about this in 2016 or 2017. But in 2018, service members in the active and reserve components who entered the military after Jan. 1, 2006 — about 1.6 million people — will have to decide whether to stay with the current retirement system or move to the new retirement system signed into law in November. Troops can make the choice beginning Jan. 1, 2018; the deadline for making the decision is Dec. 31, 2018. It’s an “opt-in” situation for the troops in this category. If they don’t opt in to the new situation, they will automatically stay in the old retirement system. Those with more than 12 years of service by the beginning of 2018 will automatically remain in the current retirement system.
The courses provide education materials, and no one in the military community — not supervisors, not personal financial managers — is going to tell a service member which choice they should make, Boswell said.
"We don’t want them to be in an advisory role, where they advise whether to or not to opt in,” he said, but to provide facts about the changes, lifelong financial preparedness, lifelong financial readiness, investing, compound interest and other information that service members and families need to understand the decision's impact.
The leader course describes various service members' circumstances and offers questions they should consider. In one scenario, the Marine corporal who joined the Corps in 2010 should ask himself how long he intends to stay in the military; whether he would join the Reserve and stay until completing 20 years; how much will his Thrift Savings Plan contributions grow until retirement; how long he will have to continue investing and receive the benefit of government contributions; and how a possible future spouse and children would factor in to his retirement plans.
DoD and the services are also providing the leader course information to others on installations, such as bank and credit union staffs, professional financial managers and professional financial counselors, Boswell said.
A “train the trainer” course is coming in September for personal financial managers to help them provide additional facts to service members and family members who need more information to make their decision.
DoD officials do not recommend one option over the other, Corso and Boswell said. “We want to make sure service members and families have the information, and it’s up to them to make the determination what’s in their best interest. Everybody’s lifelong career plans, and financial plans are different. This is a very personal decision folks are going to have to make in terms of where they see themselves going in the future. Forcing a younger population to take a look at that and make some of those decisions is a good thing.”
Although Congress is considering come changes to the new retirement benefit this year, the messages in course won't be significantly affected, Corso said. “We were conscious of some of the areas where there may still be some discussion and the training talks about this, with the caveat for potential future modifications if necessary.”
The Pentagon moves to set troops straight on its new military retirement plan
Posted from armytimes.com
Pentagon
Retirement
Finance
Posted >1 y ago
Responses: 5
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24 months into this, folks will be screaming for the current system to come back.
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SSG Warren Swan
TSgt (Join to see) - No. I retired in 12. There were rumors of this then, and not many folks I knew liked it. Speaking for me, I don't like it. It's great that a troop can invest his money into themselves and see something come back to them. What I want to see is how are they going to work this with troops hurt in battle or training? Right now, you know within reason what to expect. Who will be really qualified to talk to these Soldiers on the subject of this plan, and how it can vary place to place? Who will track the changes? There are a lot of questions I'd like answered, and hopefully someone will post here how it will actually run vs. what it is perceived to run like. I like stability in pay. Makes life a bit easier.
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TSgt (Join to see)
SSG Warren Swan - What is your concern about it affecting troops hurt in battle or training? Is your concern that they will miss out on the training, or that they will not be included in its benefits? Well, what I have learned so far is that the main retirement goes from 2.5% to 2.0% of the "Top 36 months" of your pay. With this reduction they will provide 1% into the TSP and match your contributions at 3% to your 3%, 3.5% to your 4%, and 4% to your 5% on top of the automatic 1%. That means 10% contributed into your TSP with only 5% coming from your pay. Anything else above that is on the service member. I do not believe the Army would take this option away from anyone injured. I hope they will ensure to have medical LNOs for troops educate them and ensure they have their voice heard. If not, that Squad Leader at the WTU or wherever they are should be relieved from their duties! What I have yet to see exactly is how exactly to determine which is best. I can tell those getting out early and that just live life without worry will find a nice little TSP waiting for them one day when they wake up. However, since the TSP is something that is based on a percent of your current pay at time of contribution, versus the top 36 month that those staying in lose money. That will be especially true for those who were already contributing into the TSP. It seems like a take from the careful and give to the careless type of plan. I am careful, but I would rather give up a little to ensure that people I served with have some type of financial security in place whether they care now or not.
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SSG Warren Swan
TSgt (Join to see) - My concerns with this is:
1. We had "finical planners" when I was a lower enlisted. These NCO's weren't "trained" but it was an additional duty, with a bare minimum of training to tell us. That's nice when you can actually "see" what you would be getting in most situations. So SPC Snuffy listens to this NCO and does the right thing in preparation for his future. He PCS's to Hood and the NCO there tells him he's wrong in his approach, and he doesn't know why he was told that. Between these posts, the SM is now officially confused. I would hope the Army makes a program where like recruiters, talking to Joe and Jane about investing isn't an additional duty, but a primary duty. This is going to be something that doing it halfassed will only hurt the SM.
2. I'll use myself in this one. I went through IDES when it was kinda new.Anything that had to do with finance, I was decently knowledgeable at the time being it was a simple look up and use the formulas they gave you. Plus you know how to get your high three. It's not hard. How will this play into the SM's that will hit IDES later on when there is no "traditional" retirement plan? I admit I'm not knowledgeable on this, but would like to see a crayon level brief on it. Being the formulas I had will no longer be relevant past 2018.
3. Would this be something monitored by unit leadership? I remember having to see the PSG with my squad leader every month to go over my LES. PSG really didn't care, but he wanted to see that my leave, admin data, and the pay itself matched. That was in the 90's. Not sure if they do it anymore. But in the beginning I think that is something that should be revisited, along if a SM wants to borrow against it. He should be thoroughly counseled to let him/her know what they are asking, is there any other means to get this money, and what got them to the point where they are borrowing against their investments?
I'm wondering has this really been thought out, or was it let everyone get a medal deal? It would really suck to see SPC Snuffy screw himself over and there is no oversight within reason, or some follow up by his support chain.
1. We had "finical planners" when I was a lower enlisted. These NCO's weren't "trained" but it was an additional duty, with a bare minimum of training to tell us. That's nice when you can actually "see" what you would be getting in most situations. So SPC Snuffy listens to this NCO and does the right thing in preparation for his future. He PCS's to Hood and the NCO there tells him he's wrong in his approach, and he doesn't know why he was told that. Between these posts, the SM is now officially confused. I would hope the Army makes a program where like recruiters, talking to Joe and Jane about investing isn't an additional duty, but a primary duty. This is going to be something that doing it halfassed will only hurt the SM.
2. I'll use myself in this one. I went through IDES when it was kinda new.Anything that had to do with finance, I was decently knowledgeable at the time being it was a simple look up and use the formulas they gave you. Plus you know how to get your high three. It's not hard. How will this play into the SM's that will hit IDES later on when there is no "traditional" retirement plan? I admit I'm not knowledgeable on this, but would like to see a crayon level brief on it. Being the formulas I had will no longer be relevant past 2018.
3. Would this be something monitored by unit leadership? I remember having to see the PSG with my squad leader every month to go over my LES. PSG really didn't care, but he wanted to see that my leave, admin data, and the pay itself matched. That was in the 90's. Not sure if they do it anymore. But in the beginning I think that is something that should be revisited, along if a SM wants to borrow against it. He should be thoroughly counseled to let him/her know what they are asking, is there any other means to get this money, and what got them to the point where they are borrowing against their investments?
I'm wondering has this really been thought out, or was it let everyone get a medal deal? It would really suck to see SPC Snuffy screw himself over and there is no oversight within reason, or some follow up by his support chain.
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TSgt (Join to see)
1. We do have civilians that offer financial support and classes. They are at every post in the Army Community Service building. However, then it is still on the SM or NCO to use this service. However, during inprocessing to a new post this financial advisor has a few briefs for every SM. This BRS could be added so that everyone is educated multiple times.
2. The new retirement program still has the high three with the traditional retirement. It is just 2.0% versus 2.5%.
3. I am not sure how involved leadership will be. However, the idea from #1 could assist in filling that gap where it occurs.
I understand your concerns. I had the same thoughts when this was in the planning stage. However, after I took the training via the Leader Course I realized that it has many benefits. I also know that finances alone can end someone's career because they could lose their clearance. That is just a kick in the face when they are down. In my reserve unit, however, I have seen those with financial issues brought on orders to get financial counseling. This allowed them to pay their bills while getting educated on a way forward as well.
2. The new retirement program still has the high three with the traditional retirement. It is just 2.0% versus 2.5%.
3. I am not sure how involved leadership will be. However, the idea from #1 could assist in filling that gap where it occurs.
I understand your concerns. I had the same thoughts when this was in the planning stage. However, after I took the training via the Leader Course I realized that it has many benefits. I also know that finances alone can end someone's career because they could lose their clearance. That is just a kick in the face when they are down. In my reserve unit, however, I have seen those with financial issues brought on orders to get financial counseling. This allowed them to pay their bills while getting educated on a way forward as well.
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That is good news in principle that DoD has made detailed plan on how to educate service members and leaders about the new retirement plan and their options along the way SFC Joe S. Davis Jr., MSM, DSL
Hopefully most service members will be wiser investors than the US government has been in terms of the ratio of year of 24/7 service for a 2.5% per year of service retirement pay.
Most investment vehicles have out performed that for decades.
Hopefully most service members will be wiser investors than the US government has been in terms of the ratio of year of 24/7 service for a 2.5% per year of service retirement pay.
Most investment vehicles have out performed that for decades.
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SFC Joe S. Davis Jr., MSM, DSL
LTC Stephen F. thanks for your astute response! Well said and professionally stated!
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MSgt (Join to see)
LTC Stephen F.
There will be a few wise investors but overall I think there will be problems with unwise decisions.
There will be a few wise investors but overall I think there will be problems with unwise decisions.
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LTC Stephen F.
MSgt (Join to see) - that is certainly possible that there will be individual person "unwise decisions." However it would be very hard to make financial investment decisions which are worse than the Federal government guaranteed payout of 2.5% per year of service.
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Yes, thanks for the information. I am still on the fence, whether this is advantageous to the troops or not. It seems rather complicated and with the young troops who don't see the need to save for retirement, it will be hard for them to understand. I have been to a number of briefings in the past that were to the Soldier advantage, but blown off because of non-interest. We will see how this program roll out will go.
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