The U.S. DoD's Military Retirement Overhaul Plan: A Wealth of Benefits Consulting Opportunities

The US Department of Defense recently released a proposed change to its long running military retirement system, shifting away from a strictly defined benefit program to more of a hybrid, allowing greater flexibility for the U.S. military.

| June 26, 2015

Matthew-Merker

The US Department of Defense recently released a proposed change to its long running military retirement system, shifting away from a strictly defined benefit program to more of a hybrid, allowing greater flexibility for the U.S. military. The proposal, born from recommendations by the Military Compensation and Retirement Modernization Commission, introduces a 401K styled retirement plan for soldiers who do not intend to remain in service for the required 20 years to receive the traditional pension plan.

Similar to shifts seen in the private sector, this proposal seeks to position greater financial responsibility on the individual and less on the organization. Soldiers will be encouraged to contribute to 401K "Thrift Savings Plans" with the government providing anywhere from 1-5% matching contribution based on years of service. They would be fully vested in their retirement plan within just 2 years and eligible for continuation pay after a set number of years dependent upon which branch of the military is managing it.

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