Support for the military’s current retirement system is strengthening among America’s career service members, with four out of five families expressing a desire to stick with the traditional pension rather than opt in to the new blended retirement plan that goes into effect in 2018.
Third quarter results of the First Command Financial Behaviors Index reveal that 82 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-5 and above with household incomes of at least $50,000) say they want to be grandfathered into the current retirement system. That’s up nine points from the previous quarter and 14 points from the same time a year ago.
The new system, which goes into effect on Jan. 1, 2018, calls for a 20 percent reduction in current retirement pay in exchange for a defined contribution program of automatic and matching Thrift Savings Plan contributions, a mid-career continuation pay bonus and options to receive a portion of retirement as a lump sum.
Proponents say the new structure will offer greater financial flexibility and pave the way for a higher percentage of service members to leave the military with at least some retirement savings. But the majority of today’s career military remain unconvinced.