The Federal Retirement Thrift Investment Board, Washington, has proposed rules to implement military retirement reforms that shift benefits to a blended system with enhanced contributions to the $501 billion Thrift Savings Plan from a defined benefit plan.
The changes, mandated by 2016's National Defense Authorization Act, call for employing services to contribute 1% of a service member's monthly pay, and service members are automatically enrolled at a 3% contribution rate.
The employer will match contributions on the first 3% of pay, and 50 cents on the dollar for the next 2% that a member contributes.
Contributions will default to a lifecycle fund.
To pay for the TSP contributions, the current defined benefit plan, which covers service members staying 20 years or more, will reduce benefits by 20% and decrease a disability calculation. Service members will continue to be enrolled in the plan. Current service members and retirees will be grandfathered into the current retirement system, but those with fewer than 12 years of service can opt into the new program. Current service members who voluntarily contribute to TSP will also get matching contributions when the law goes into effect Jan. 1, 2018.
The proposal posted in the Federal Register on Monday calls for public comments by Nov. 13.