Military personnel face a critical choice for their retirement plan
The U.S. military is a launching a new mission this year, one that aims to ensure more of those who serve are also saving for their financial future.
Pentagon officials are calling the move the biggest update to the military's pension and benefits since World War II. The dramatic changes to its retirement system will impact millions of current and future service members.
Military service has long brought with it a highly valued pension for members of the armed forces, who have made their careers in the U.S. Army, Air Force, Marines, Navy and Coast Guard.
Until this year, all military members could potentially receive a guaranteed pension of at least 50 percent of their base pay for life. But to earn it, they must serve for at least 20 years. Most never stay that long.
Busch, who served for 22 years in the U.S. Navy, said the new retirement program will help jump start many members' long-term savings. She said it is also "a key step in recruiting and maintaining the talent we need to ensure military readiness."
"Today people move from job to job and they need a retirement benefit that they can take with them," said Jeri Busch, director of military compensation policy for the U.S. Department of Defense.
The new retirement program — called the "Blended Retirement System" or "BRS" — combines a traditional pension with a defined contribution plan, similar to a private sector 401(k) plan. As of Jan. 1, service members entering the military will automatically be enrolled in the new BRS program.
Those who have served 12 years or more as of Dec. 31, 2017 will remain in the old legacy retirement plan, earning that guaranteed pension.