Take Action: Financial Literacy Month – Important lifetime decisions
Posted by LT Sarah Janaro, Tuesday, April 18, 2017
April is “Spring into Action Month” that highlights five national campaigns; Sexual Assault Awareness Month, Alcohol Awareness Month, Month of the Military Child, Volunteer Month, and Financial Literacy Month. Throughout the month of April, we will highlight how even the smallest action can make a big impact to those around you. Follow this series here on All Hands to learn about all of these national campaigns.
Written by Capt. Mike Spolidoro
Blended Retirement System (BRS) Implementation Team
In January 2017, Chief Petty Officer Tim Hoagland and I volunteered for long-term active duty orders to assist with the implementation of the modernized retirement system for the Coast Guard. Not only did we want to have a role in one of the largest changes to military and uniformed service compensation since World War II, we were personally committed as well because like, nearly 30,000 other active duty and reserve personnel, we were also eligible to opt-in to the BRS beginning in January 2018. That’s right! Despite having been in the Coast Guard for two decades, we are eligible to enroll because we’ll both have less than 4,320 retirement points on 31 December 2017. So, like many of you, we have an important choice to make in the upcoming year – a decision that requires careful consideration.
The modernized retirement system, often referred to as the Blended Retirement System or BRS, dates back to a study completed by the Military Compensation and Retirement Modernization Commission in January 2015. Among the Commission’s recommendations was the implementation of a system that offered a defined benefit (annuity) and defined contribution (Thrift Savings Plan) in addition to a continuation pay, directed at mid-career personnel. Following the Commission’s report, Congress passed the National Defense Authorization Act of Fiscal Year 2016 which spelled out the provisions of the Blended Retirement System.
So, beginning in calendar year 2018, eligible members – those Active Component personnel with less than 12 years of service and Reserve Component personnel with less than 4,320 points on 31 December 2017 – are eligible to opt-in using Direct Access. Currently, eligible members are receiving notifications from the Coast Guard Alert Warning System, which members must acknowledge by replying to the email in their Coast Guard email account.
The decision to opt-in is irrevocable, meaning it cannot be changed once made. Those personnel entering the military on or after 1 January 2018 will be automatically enrolled in BRS. All members who entered the Coast Guard on or before 31 December 2017 are grandfathered under the legacy retirement system and will not be automatically switched to the BRS.
Those members who choose to enroll in the BRS will be eligible to receive government automatic and matching contributions in a Thrift Savings Plan (TSP) account in addition to a mid-career bonus known as continuation pay, payable between eight and 12 years of service. The TSP is similar to civilian 401k plans, but only available to federal civilian and military personnel. The Coast Guard is in the process of deciding the amount and timing for continuation pay. Those who receive continuation pay, must agree to serve additional obligated service or face recoupment.
While eligible members have the entire 2018 calendar year to make an opt-in decision, it is important to note that the longer a member delays the opt-in decision, the more government automatic and matching contributions he or she misses out on. Although no continuation pay decisions are final, members approaching 12 years of service in 2018 should stay tuned to updates about BRS because it is possible to opt-in to BRS and miss continuation pay. Continuation pay must be paid prior to 12 years of service.
This is an important lifetime decision. In addition to completing the mandatory Joint Knowledge Online (JKO) Opt-in training, members should seek additional opportunities to increase financial literacy and consider consulting with a financial planner. Family members are also encouraged to complete the non-CAC enabled JKO Opt-in course and talk with loved ones before making an opt-in decision in 2018.
There are many places to visit to receive additional BRS information. These include:
- Thrift Savings Plans (TSP) – Provides Coast Guard members and employees with information, forms, Coast Guard contacts and related links for initiating and updating TSP accounts.
- Office of Work-Life Personal Financial Management Program – This site features financial information and resources. POC for issues related to personal financial management is your Personal Financial Management Coordinator (PFMC) on your Regional Work-Life staff at 1-800-872-4857 or visit www.uscg.mil/worklife/contact.asp. You can also contact the Command Financial Specialist (CFS) assigned at most units throughout the Coast Guard.
- The Coast Guard’s Blended Retirement System website featuring information cards and posters, links to training and news articles, and applicable message traffic.
- The Department of Defense’s Blended Retirement System website.
For additional questions, you can contact the Coast Guard’s BRS Implementation Team at HQS-PolicyandStandards@uscg.mil.
Keep learning by checking out #blendedretirement on Twitter to see more infographics and posts about BRS!