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Pentagon Backs Overhaul of Military Retirement System

“The Defense Department on Wednesday said it has decided to back a historic overhaul of the military’s 20-year retirement system, increasing the chances of an approval by Congress this year,” Stars and Stripes reports.  

“The proposed changes would vastly increase the number of servicemembers with access to retirement benefits by blending the current cliff pension with a 401(k)-style system for all new recruits beginning in 2018. The idea was floated in January by a special commission created by Congress to curb ballooning personnel costs and has since drawn widespread support in the House and Senate as a way to modernize an outdated benefits system. Both chambers have added the overhaul into their annual defense authorization bills.”  

“After 2018, all new recruits will automatically have 3 percent of their pay diverted to a Thrift Savings Plan account, and the department will match with an amount equal to 1 percent of their pay. Troops can only reduce their contributions or opt out after completing financial literacy training at their first permanent duty station.”

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