Does anyone know what impact this will have on reservists?
I am not aware of any changes to the non-matching TSP and point based retirement, so I would appreciate a heads up if something has changed.
Sure, read the post at:
http://the-military-guide.com/should-you-choose-the-military-blended-retirement-system/Note that both infographics linked from that post have been brought to you by the same group at DoD. In the months since those two images were released the same DoD has gone back to Congress asking for a few "minor changes" to things like when the TSP matching contributions start (four years of service vs three years), the size of the mid-career bonus, and the amount of the lump-sum pension option. The new pension system hasn't even started yet and the #KeepYourPromise crowd is already rightfully annoyed.
Here's what we hope we know. "Hope" as in "it's in the legislation and Congress hasn't changed it yet":
1. The new blended retirement system starts 1 January 2018. Everyone who's now on active duty or in the Reserves/Guard (including IRR and gray area) is grandfathered under the current system. Those who've joined the military after 2005 will have a certain amount of time (rumored to be a year) during 2018 to decide whether to stay with the current retirement system or to switch over to the new blended system. Everyone who joins the military after 2017 will be under the new system.
2. Reserve/Guard servicemembers who are under the new system will have a 2% multiple on their point count (instead of the current 2.5%), just like active duty. They'll have the same TSP matching as active duty. They'll have a smaller mid-career bonus, which might be based on retaining certain specialties instead of being paid to everyone who agrees to sign a contract extension. Nobody knows how the bonus will be calculated.
3. Reserve/Guard retirees might even have a lump-sum option on their pension, although we're not sure whether it'll be the same terms as active duty. DoD would love to hand out lump sums and reduced pensions to active-duty retirees in their 30s or 40s and not have to pay the full pension amount until age 67. The math is not as compelling for DoD to pay a lump sum at age 60 and then to revert to a full pension payment at age 67.
We'd love to build spreadsheets and calculators and other analysis tools but nobody is sure how much the mid-career bonus will be and who would be eligible to get it. Nobody knows what the lump-sum option will be. Rumor is that DoD has even asked Congress to delay the start of the TSP matching until the fourth year of service (instead of the third year) because the services would like to dangle TSP matching as a re-enlistment incentive to those who originally joined on four-year contracts. You can imagine what type of feedback our elected representatives are getting from their military constituents on that.
I'm pretty sure that The Military Guide will be all over it until at least 2018.