According to the Federal government, approximately 19% of servicemembers historically have reached the 20-year retirement requirement for military pensions. For some services with a higher turnover rate, such as the Marine Corps, the percentage was even lower. This left almost 80% of servicemembers exiting the military without any form of retirement planning or benefits. The historical military plan was known as a “Defined-Benefit” plan.
The genesis for the new Blended Retirement System can be traced directly to the National Defense Authorization Act of 2013. The relevant mandate of this act was to review the existing military retirement structure via the Military Compensation and Retirement Modernization Commission (MCRMC). The MCRMC found that the existing military retirement model failed to support the majority of the force and that by implementing a “Blended plan,” not only would the entirety of the force benefit, the government would also save money over time.
The historical plan was identified as inflexible, inefficient, and inequitable with too much of a “one size fits all” approach. The new Blended Retirement System enables a service member to serve a variable amount of years and still be able to leave the military with a variable retirement account. For an excellent summary of the pro’s & con’s of this historical retirement plan and the generation of the new Blended Retirement System, find a report from the RAND Corporation here.
The new Blended Retirement System went into effect in 2019 and while its adoption was not as successful as anticipated, it is now the primary retirement plan for US Servicemembers.
