The Department of Defense needs to bolster its financial education efforts for service members who participate in a new military retirement system, according to a report released Monday from the Government Accountability Office.
The Blended Retirement System went into effect Jan. 1, 2018. Since that point, new service members have been automatically enrolled in the BRS within the Thrift Savings Plan — the $590 billion retirement system for 5.7 million federal employees and members of the uniformed services — while those with less than 12 years of service are also eligible to join the BRS.
Previously, members of the uniformed services had access to a defined benefit plan but had to serve at least 20 years to receive the annuity. The BRS offers service members a defined contribution option as part of the TSP as well as a reduced pension should they hit the 20-year mark.
Ahead of the BRS launch, the Defense Department trained financial counselors to provide service members in-person, one-on-one financial counseling and classroom courses on the BRS and related topics. In addition, the DOD prepared ongoing financial literacy training that service members will take upon reaching specific career and life stages, according to the GAO report.
BRS training met many of the effective practices for financial literacy training identified in prior GAO work, but some DOD training does not incorporate the practice of assessing service members' financial literacy, the GAO found.
"DOD could use such assessments to modify course material to bolster training in areas where service members' comprehension was weaker," the report stated.
"Without assessing whether its financial literacy training is effectively conveying course information, DOD may be missing opportunities to better support service members' retirement decisions," the report said.
Service members also reported challenges in taking the opt-in course for the BRS that might inform ongoing and future DOD training, the GAO said. Service members had difficulty understanding the training due to their low financial literacy and trouble setting up online access to their TSP accounts, according to the report.
In its report, the GAO recommended the Defense Department assess its retirement course evaluations and provide key information on the calculation of retirement lump-sum payments. It also recommended the Federal Retirement Thrift Investment Board, Washington, which administers the TSP, explore alternatives for service members to receive their TSP passwords.
Both agencies agreed with their respective recommendations, according to the report.
Kim Weaver, the FRTIB's director of external affairs, said the board has been focused on the issue of participant identity verification for some time. "Trying to balance the security of ensuring TSP information is provided to the correct individual against ease of access is vital and extremely difficult," Ms. Weaver said in an email. "As recommended, we will continue to explore avenues to address account access, while continuing to emphasize the need for security."
A Defense Department representative could not immediately be reached for comment.
"This report offers an important road map for improvements we should make to help provide the brave men and women who serve our country the secure financial futures they deserve," said Sen. Patty Murray, D-Wash., ranking member of the Senate Health, Education, Labor and Pensions Committee, in a news release. "I'm working to make sure we act on these findings to put our service members in the strongest possible position to manage their financial futures."