Changes to military retirement systems and what you should know

Following a long-term study of the military retirement benefit, the Military Retirement Modernization Commission recommended significant changes to the retirement system. Those modifications could have a significant effect on spouses eligible for Qualified Domestic Relations Orders (QDRO).

The commission recommended changes to reduce government costs and require military members to contribute to their own retirement. The new system includes:

Defined benefit

Retired pay will be two percent times the number of years of service with pay taking different forms that include:

  • Constant pension payment
  • Lump sum, then smaller pension until full social security retirement, then full amount
  • Larger lump sum, then no payment until full social security retirement

Defined contribution to the Thrift Savings Plan (TSP)

The military contributes one percent of base pay to the TSP account. Servicemembers will be automatically enrolled at three percent individual contribution with the option to increase, decrease or terminate. The military will match up to five percent of the contribution after two years of service. Vesting occurs after two complete years of service.

Continuation pay

At 12 years of service, active duty service members who commit to four additional years would receive a bonus equal to 2.5 months of basic pay with services increasing continuation pay bonuses, if necessary. While military members have been to contribute to the TSP since 2001, the new system provides a five percent match. In addition, all members will receive at least one percent of their base pay contributed to their TSP by the government.

Military divorces that involve pensions create challenges in an already complex marital dissolution process. An attorney skilled and experienced in this specific area of family law can serve as an invaluable asset for servicemembers and their spouses.

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