Military retirees in Florida may find themselves confused by the veterans’ benefits system, especially the changes to the retirement system that took place on January 1, 2018. The new system is known as the Blended Retirement System because it brings together two types of retirement income, annuities for people who retire after 20 years of service and income from the Thrift Savings Plan or TSP. The TSP is a government-run 401(k) retirement account that allows people to invest their own savings in stocks as well as receive an employer contribution.
The new system changes the annuity formula currently used for veterans’ benefits, which is based on 36 months of basic pay at their highest, multiplied by 2.5 percent of their years of service. Under the blended system, the multiplier used is 2 percent instead. However, the offset is made up by government contributions to the TSP. Each month, the government will automatically contribute 1 percent of their basic pay, and the member of the military will be enrolled for a 3 percent contribution. The government will begin to match contributions up to 5 percent after two years of service.
TSP can be particularly important for members of the military who do not remain in the service long enough for a traditional retirement pension. Statistics show that 83 percent of veterans do not remain in the military long enough for retirement; this means that under the traditional annuity, they would receive nothing. The TSP allows members of the service to accumulate a retirement fund that can continue throughout their working lives.
Many veterans are not receiving all the benefits to which they are entitled despite years of service to their country. A veterans’ benefits lawyer may help retired servicemembers deal with the VA bureaucracy and manage complex application processes in order to help them receive the maximum amount they can.