The Senate on Tuesday passed a revised defense spending bill that includes reforms to the military retirement system. President Barack Obama, who vetoed the original spending package in October, is expected to sign the bill, which removed some spending caps.
The Senate approved the bill 91-3; the House passed it last week by a 370-58 vote.
The $607 billion National Defense Authorization Act calls for a new military retirement system beginning in 2018 that requires new service members to participate in the $443.3 Thrift Savings PlanWashington. The Department of Defense will make an automatic 1% contribution to TSP accounts, and can match up to 4% more, for up to 26 years of service. To pay for that, the current defined benefit plan, which covers service members staying 20 years or more, will reduce benefits by 20% and decrease a disability calculation.
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 in January 2018. Members with 12 years of service could take a lump-sum payment upon separation.
The changes were recommended by the Military Compensation and Retirement Modernization Commission in January as a way to expand retirement coverage for the estimated 83% of service members who do not meet the military’s 20-year vesting limit for the defined benefit plan.
