What Is the Blended Retirement System (BRS)?

The Blended Retirement System (BRS) represents a significant evolution in military retirement benefits, serving as the default plan for service members entering the uniformed services on or after January 1, 2018. This system blends elements of a traditional defined benefit pension with a defined contribution plan, specifically the Thrift Savings Plan (TSP), which includes government contributions. The BRS aims to provide retirement benefits to a broader range of service members, acknowledging that not all individuals serve for a full 20-year career.

Understanding the BRS Components

The Blended Retirement System integrates several key financial components designed to provide a comprehensive retirement benefit. These include contributions to the Thrift Savings Plan, a defined benefit pension, and a mid-career incentive known as Continuation Pay. Each component plays a distinct role in building a service member’s retirement security.

The Thrift Savings Plan (TSP) functions similarly to a civilian 401(k) retirement account, allowing service members to invest their own money for retirement. Under the BRS, the Department of Defense (DoD) contributes to a service member’s TSP account in two ways. An automatic 1% contribution of basic pay is deposited after 60 days of service, which does not come from the service member’s pay.

Second, the DoD provides matching contributions to the TSP. The DoD matches dollar-for-dollar for the first 3% of basic pay contributed and 50 cents on the dollar for the next 2%. If a service member contributes at least 5% of their basic pay, they can receive a total government contribution of 5% (1% automatic plus 4% matching). These matching contributions begin after two years of service and continue through the 26th year.

Vesting in the TSP determines ownership of these contributions. Service members are immediately vested in their own contributions and any matching contributions received. Vesting for the automatic 1% government contributions occurs after completing two years of service. Once vested, these funds belong to the service member and can be rolled over to another qualified retirement plan upon separation.

The defined benefit, or pension, is another core component of the BRS for those who serve at least 20 years. Service members who serve at least 20 years are eligible to receive a monthly pension upon retirement. The pension amount is calculated using a formula: 2.0% multiplied by the number of years of service, further multiplied by the average of the highest 36 months of basic pay. For example, a service member retiring at 20 years would receive 40% (2.0% x 20 years) of their highest 36 months of basic pay.

Continuation Pay is a one-time cash payment designed as a retention incentive for service members in the BRS. This payment is typically offered between eight and 12 years of service in exchange for an agreement to serve an additional four years. The amount of Continuation Pay varies by service branch and can range from 2.5 to 13 times monthly basic pay for active-duty members, and 0.5 to 6 times monthly basic pay for National Guard or Reserve members in drilling status. This payment is taxable and may be received as a lump sum or in installments, depending on service-specific guidance.

BRS Eligibility and Participation

The implementation of the Blended Retirement System established clear criteria for who falls under the new plan and how existing service members could transition into it. These guidelines ensured a structured rollout of the revised retirement framework.

Service members who entered the uniformed services on or after January 1, 2018, are automatically enrolled in the Blended Retirement System. The BRS is their sole military retirement system option.

Existing service members who were serving before January 1, 2018, had a specific opportunity to opt into the BRS. This option was available to active-duty service members with fewer than 12 years of service as of December 31, 2017. For members of the National Guard or Reserves, eligibility to opt in applied if they had accrued fewer than 4,320 retirement points by December 31, 2017.

The decision period for eligible service members to opt into the BRS was from January 1, 2018, to December 31, 2018. This one-time opportunity allowed current service members to choose between their existing legacy retirement plan and the new BRS. Once a choice was made, it was irrevocable.

Upon enrollment in the BRS, service members are enrolled in the Thrift Savings Plan. Initially, 5% of their basic pay is automatically deducted and contributed to their TSP account. Service members have the flexibility to adjust this contribution percentage.

BRS Versus the Legacy Retirement System

The introduction of the Blended Retirement System marked a significant shift from the previous “High-3” legacy retirement system. Understanding the differences between these two systems clarifies the distinct advantages and structural changes brought by the BRS.

The legacy retirement system was a purely defined benefit plan. Service members only received a pension if they completed 20 or more years of service. Under this system, the monthly pension was calculated as 2.5% multiplied by the years of service, further multiplied by the average of the highest 36 months of basic pay. Service members separating before 20 years of service received no government retirement benefits.

A primary difference between the BRS and the legacy system is the inclusion of a defined contribution component. The BRS integrates the Thrift Savings Plan with government automatic and matching contributions, a feature entirely absent from the legacy system. This addition provides a portable retirement savings vehicle that service members can take with them, regardless of their length of service.

Another key distinction lies in the pension multiplier used for calculating the defined benefit. The BRS uses a 2.0% multiplier for each year of service, whereas the legacy system used a 2.5% multiplier. This adjustment in the BRS pension formula is offset by the government contributions to the TSP, providing a more balanced approach to retirement benefits. While the monthly pension may be lower for those who serve 20 years or more under BRS, the added TSP funds contribute to overall retirement security.

The BRS also introduced Continuation Pay, a mid-career incentive not available under the legacy retirement system. This one-time cash payment provides a financial incentive for service members to commit to additional years of service, typically between eight and 12 years into their careers.

The BRS was designed to provide retirement benefits to more service members. Under the legacy system, approximately 81% of service members left with no government retirement benefit. The BRS ensures that about 85% of service members will receive a retirement benefit through the portable TSP component.