The Blended Retirement System (BRS) is a retirement plan that was introduced by the U.S. Department of Defense on January 1, 2018 for all military service members. The BRS provides a more flexible and modern retirement system when compared to the older traditional retirement system known as the legacy system. The name originates from the fact that the BRS is blending different elements of income sources into one. These income sources in the BRS include the TSP, an annuity payment, and a continuation pay bonus which is essentially a sign on bonus.
The Components of the BRS
As the name implies the BRS has blended various retirement income sources into one. Therefore, anyone who is enrolled into the BRS is given the chance to make use of the following:
- Thrift Savings Plan (TSP): A defined contribution plan very similar to a civilian 401k. When opted into the BRS you also receive a matching contribution.
- Annuity Payment: A monthly retirement payment you can qualify for after meeting certain criteria.
- Continuation Pay: A sign on bonus you receive once you’ve hit 8-12 years time in service and decide to continue with your career in the military.
TSP Matching Contribution
One of the benefits you get when enrolled in the BRS is it’s matching contributions which consist of two components:
- Service Automatic 1% Contribution: As the name implies, this is an automatic contribution that is invested into your TSP account each month. The amount invested is equal to 1% of your base pay. It’s import to know that this contribution does not come out of your paycheck, so it’s essentially free money that is being put into your account. For example, if you yourself decide not to contribute any money into the TSP, the automatic 1% will still get contributed each month. If you have never logged into your TSP, log in and allocate your 1% automatic contributions!
- Service Matching Contributions: In addition to the 1% automatic contribution, you can also make use of the service matching contribution which will match up to 3% of you basic pay fully plus half of the next 2% you invest (with the 1% automatic contribution this equates to a 5% match). All service members qualify for this after 2 years of service.