Personal Financial Management Program Blended Retirement …

1/31/2017

Personal Financial Management Program

Blended Retirement System

Jessica Perdew

Background ? DoD began serious study of blended retirement in

2011 ? DoD research was provided to MCRMC ? MCRMC final report contained recommendations for

changes to retirement system (Jan 2015) ? DoD FY-16 budget included recommendations from

MCRMC final report ? Congress enacted 2016 NDAA containing changes to

retirement system and mandating expansion to financial literacy education

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The Basics ? Effective 1 January 2018 ? Service members who entered service prior to 1

January 2018 are grandfathered in the current system ? Service members who entered service prior to 1 January 2018 and who have < 12 years of service or 4,320 retirement points may opt-in to the new system ? The opt-in decision is irrevocable

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Terminology

Defined Benefit Plan ? Specified benefit at time of retirement Defined Contribution Plan ? Specified contributions during period of employment Vesting ? Control of shares in an investment fund Annuity ? A sum paid to an annuitant for a period of time

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Current System

? Defined benefit

? 20 year cliff vested annuity

? 2.5% X YOS X High 36 ? CSB/REDUX Option

? Defined contribution

? Member may contribute to TSP up to annual IRS limits

New System

? Defined benefit

? 20 year cliff vested annuity

? 2.0% X YOS X High 36 ? Lump sum option

? Defined contribution

? 1% automatic government contribution

? Government match up to 4%

? Vesting in auto contribution at completion of two years service (beginning of 25th month)

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Continuation Pay

Cash pay out at 12 years of service Must agree to complete four additional years of service Active component = 2.5 x Base pay (min) up to 13 X Base pay Reserve component = .5 x Base pay (min) up to 6 X Base pay

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Continuation Pay

Cash pay out at 12 years of service Must agree to complete four additional years of service Active component = 2.5 x Base pay (min) up to 13 X Base pay Reserve component = .5 x Base pay (min) up to 6 X Base pay

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Implementation

Notify

Train

Elect

End of Election Period

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Communication

? Primary training for BRS online via MarineNet ? Leaders ? Election population ? New accessions

? Installation PFM and unit CFS will provide supplementary face to face education and counseling

? . gov/

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Personal Financial Readiness Program

? 10 U.S.C. 992, DoDI 1342.22, SecNavInst 1740.4, MCO 1700.37

? Installation P&PD services ? Vol Ed, Library, FMEAP, Transition, Relocation, I&R, Sponsorship, Leadership Scholar, PFRP, Marine For Life

? PFM ? Accredited Financial Counselor ? CFS ? Command Financial Specialist ? PFC ? Personal Financial Counselor

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