Calculating Retired Pay Under the Blended Retirement System

How much will I make in monthly retired pay under the Blended Retirement System?  While the true amount will be calculated by your service’s pay branch (like the Defense Finance and Accounting Service for most branches [except the Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration]), I can show you a quick way to get a basic idea of what your pay will be.

 

This article will only cover how to estimate your pay under the new retirement plan.

 

The basic formula is:

 

(Points ÷ 18,000) X Base pay

 

Here’s how it works.  As I said before, find the creditable points you have earned and write it down.  Divide that number by 18,000.  This will give you a percentage.  Write this percentage into your notes.

 

Now, find your rate of monthly base pay for your pay grade and years of service on the 2017 military pay chart.  There is a link to this chart below.  Put that rate of pay into your notes.

 

Finally, multiply the rate of pay by the percentage you determined earlier.  Drop any cents you have in this answer so you only have whole dollars.  The result is a relatively close estimate of your retired pay.

 

Let’s see an example of this formula.

 

Sergeant First Class Jackson (which is the pay grade of E7 for those of you in other services) has 2,437 retirement points and twenty-six years of service.  His base pay is $5,167.50 per month.

 

The formula in this case would look like this.

 

(2,437 ÷ 18,000) X $5,167.50

 

If we divide 2,347 by 18,000, we get 13.04%.  Now we multiply his base pay of $5,167.50 by 13.04%.  The result is $673.86.  When we drop the pennies, we get $673.00.  This is an estimate of his monthly retired pay based on this year’s pay scale.

 

Now, I have obviously left out some factors such as whether SFC Jackson falls under the high-three or final pay categories and a few other details.  This was intention because I’m focusing on simplicity here.  The intent is to get a rough estimate not an exact calculation like DFAS would give you.

 

Here are a few other bits of trivia that are nice goals to have before you walk out the door. For these assumptions, I’m going to assume you have at least three years of time in your highest pay grade.

 

If you have 2,400 creditable retirement points, your monthly retired pay, regardless of grade, will be equal to what you would earn in a monthly four-period (or one weekend) drill.  Not bad for a part-time job, is it?

 

If your branch’s typical annual training is fourteen days long and you have 3,100 creditable points, your monthly pay will be equivalent to drill pay plus one-twelfth of annual training pay (meaning you will have twelve months of drill pay and full AT pay at the end of the year).  If your branch’s annual training is fifteen days long, you will need 3,150 points to get this same result.  As you can see, each additional fifty points you earn will equal another day of pay in your monthly retirement.

 

That’s the simple formula, guys.  Give it a shot with your own numbers and see what you get.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
2017 Military Pay Chart
DFAS.mil
U.S. Coast Guard Pay and Personnel Center


Podcast Episode 0014 – Calculating Retired Pay Under the Blended Retirement System


References
:
2017 Military Pay Chart
DFAS.mil
U.S. Coast Guard Pay and Personnel Center



What Is the Blended Retirement System?

In my eight years as a retirement services officer, nothing has created more controversy than the Modernized (or Blended) Retirement System.  Many times, it is simply called BRS for short.

 

The research, discussion, and outright myths and rumors associated with this new plan – be it in the form of papers from the war colleges of the various branches to websites praising or decrying it –  began years before the law creating it was even passed.  Now that we have some actual written information about the plan, let’s begin our own discussion of the plan and how it will work.

 

Last year’s National Defense Authorization Act (for Fiscal Year 2016) created a modified retirement plan for military service members.  The law will have several effects on the retirement plan.  It changed the way retired pay is calculated, modified the workings of the uniformed services’ Thrift Savings Plan, eliminated the Career Status Bonus while creating a new type of career continuation pay, and added the ability to opt for a partial lump sum payout of retired pay.  This year’s authorization act changed things a little more.

 

I’m going to split this article into a several part series due to the number of topics that need to be covered.  If not, this article will seem to go on forever.  That certainly doesn’t help with comprehending what I’m trying to teach.

 

Here is what you initially need to know about BRS.  I will explain these points and others further in future articles.

  • Monthly retired pay is not being eliminated under the plan. It is only going to be reduced by twenty percent. If you’re an active duty retiree with twenty-years of active service, this means a 40% pension instead of 50%.  For reservists, I will refer you to the “Value of a Retirement Point” charts in the Resources section of my site.
  • The Thrift Savings Plan will now have matching funds up to 5%.
  • Each branch of service will set its own criteria for the career continuation bonus. It will be paid to members sometime between the eighth and twelfth year of service if they agree to serve at least three more years.  For active duty members, the bonus will be between 2.5 to 13 months of base pay.  For reservists, the bonus will be between 0.5 and 6 months of base pay.
  • This is an opt-in plan for current service members. No one will be forced into it. If you are currently serving on 31 December 2017 and have less than 4,320 retirement points, you will have the choice to opt into the new plan.
  • Members who join on or after 1 January 2018 will automatically fall under the new plan.

 

Join me next week when I will describe how to calculate your retired pay under the Blended Retirement System.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)


Podcast Episode 0013 – What is the Blended Retirement System?

References:
The Uniformed Services Blended Retirement System
DOD Implementation of the Blended Retirement System
BRS Implementation Timeline
Are You Opt-In Ready?
BRS Infographic – Active Component
BRS Infographic – Reserve Component
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)


YouTube Episode 0015 – What is the Blended Retirement System?

https://youtu.be/JCVNwuJtu1g

 

References:
Value of a Retirement Point Chart for 2017 (Legacy System)
Value of a Retirement Point Chart for 2017 (Blended Retirement System)


Calculating Retired Pay Under the Current (Legacy) Retirement Plan

Now it’s time to answer one of the big questions everyone asks.  How much will I make in monthly retired pay?  While the true amount will be calculated by your service’s pay branch (like the Defense Finance and Accounting Service for most branches [except the Coast Guard, Public Health Service, and the National Oceanic and Atmospheric Administration]), I can show you a quick way to get a basic idea of what your pay will be.

 

This article will only cover how to estimate your pay under the current (soon to be “legacy”) retirement plan.  There is a slightly different method for the new Blended Retirement System coming into effect next year.

 

Last week, I covered how to read an Army National Guard retirement points statement.  Don’t worry, all of you other branches, I will do the same for your statements in time.  For now, all you need to know is how many creditable points you have earned.

 

There is a little math involved here, but it’s not too bad.

 

The basic formula is:

 

(Points ÷ 14,400) X Base pay

 

Here’s how it works.  As I said before, find the creditable points you have earned and write it down.  Divide that number by 14,400.  This will give you a percentage.  Write this percentage into your notes.

 

Now, find your rate of monthly base pay for your pay grade and years of service on the 2017 military pay chart.  There is a link to this chart below.  Put that rate of pay into your notes.

 

Finally, multiply the rate of pay by the percentage you determined earlier.  Drop any cents you have in this answer so you only have whole dollars.  The result is a relatively close estimate of your retired pay.

 

Let’s see an example of this formula.

 

Sergeant First Class Jackson (which is the pay grade of E7 for those of you in other services) has 2,437 retirement points and twenty-six years of service.  His base pay is $5,167.50 per month.

 

The formula in this case would look like this.

 

(2,437 ÷ 14,400) X $5,167.50

 

If we divide 2,347 by 14,400, we get 16.92%.  Now we multiply his base pay of $5,167.50 by 16.92%.  The result is $874.34.  When we drop the pennies, we get $874.00.  This is an estimate of his monthly retired pay based on this year’s pay scale.

 

Now, I have obviously left out some factors such as whether SFC Jackson falls under the high-three or final pay categories and a few other details.  This was intention because I’m focusing on simplicity here.  The intent is to get a rough estimate not an exact calculation like DFAS would give you.

 

Here are a few other bits of trivia that are nice goals to have before you walk out the door. For these assumptions, I’m going to assume you have at least three years of time in your highest pay grade.

 

If you have 1,920 creditable retirement points, your monthly retired pay, regardless of grade, will be equal to what you would earn in a monthly four-period (or one weekend) drill.  Not bad for a part-time job, is it?

 

If your branch’s typical annual training is fourteen days long and you have 2,480 creditable points, your monthly pay will be equivalent to drill pay plus one-twelfth of annual training pay (meaning you will have twelve months of drill pay and full AT pay at the end of the year).  If your branch’s annual training is fifteen days long, you will need 2,520 points to get this same result.  As you can see, each additional forty points you earn will equal another day of pay in your monthly retirement.

 

That’s the simple formula, guys.  Give it a shot with your own numbers and see what you get.

 

Join me next week when I will present an introduction to the new Modernized (or Blended) Retirement System.

 

As always, thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
2017 Military Pay Chart
DFAS.mil
U.S. Coast Guard Pay and Personnel Center

Related YouTube Episodes:
Episode 0012 – How to Read an Army National Guard Retirement Points Statement



Podcast Episode 0012 – Calculating Retired Pay Under the Current (Legacy) Retirement Plan

The basic formula is:      (Points ÷ 14,400) X Base pay

References:
2017 Military Pay Chart
DFAS.mil
U.S. Coast Guard Pay and Personnel Center

Related YouTube Episodes:
Episode 0012 – How to Read an Army National Guard Retirement Points Statement

 


Earning Additional Retirement Points with Distance Learning Courses

This week we’re going to talk about another way to earn retirement points: distance learning (or correspondence) courses.  The policies regarding these courses has changed considerably over the years.  This article will primarily focus on Army practices.  I would appreciate comments from other reserve components regarding how they manage retirement points for these courses.

 

Distance learning courses have been available for decades.  Many of us in the Army may remember the yellow books we used to get in the mail and having to post our completed tests back and wait for our results to be mailed back to us.  Later on, these courses were available online and we could get instant feedback on our test results.  Over time, the list of courses and the military websites which offered them grew to thousands of different courses and subcourses.

 

We used to be able to earn one retirement point for every three hours of distance learning we completed.  Nowadays, things have changed quite a bit.  I will run through a quick version of those changes.  I’m going to paraphrase heavily from a National Guard information paper on this topic since it provides a lot of good history on the program.  The actual paper is available in the links below.

 

Correspondence courses used to be completed for retirement points only.  Every reserve component had some version of courses available to its members.

 

In December 2001, National Guard members were authorized to be paid compensation for completion of certain distance learning courses.  Guidance from the Under Secretary of Defense for Personnel and Readiness conflicted with this change in Army guidance because it stated service members could be compensated by way of points and financial payment.  The Army guidance implied compensation could be by way of either retirement points or payment.

 

Over time this created a great deal of confusion.  In fact, points managers in the states’ National Guards, except under certain circumstances, were directed in 2012 to stop awarding retirement points for distance learning courses. The Army Reserve and other reserve components continued to award points for most courses, though.

 

Points for distance learning has now become more restrictive.  The law now allows only certain courses to be paid after they are completed.  This pay results in additional retirement points.  These courses have to support pre-deployment and unit readiness.  The list of courses which meet this requirement now numbers less than four hundred.

 

The major problem with allowing courses to be paid upon their completion is there was no additional money authorized for this payment.  Commanders of a deployment expeditionary force (DEF) – a unit which has been notified of a pending deployment –  are able to direct service members to complete eligible courses but there is no guarantee money will be available to pay them.

 

Payment for completed courses is based on four hours of work regardless of the number of credit hours the course is worth.  Proof of the completed course is held by the member’s unit until money is available, if that happens.

 

This change is the law has had a significant impact on the ability of members to earn additional retirement points.  The National Guard is lobbying the Secretary of Defense to modify its policy to less restrictive Army policy. This would allow the continued use of retirement points as a way to compensate members for completing these courses.  We’ll have to wait until we get an answer to this question.

 

Retirement points for completion of distance learning courses – even if they are not paid money – was a great way to incentivize members for their additional work.  Whenever the option to complete these courses is available, I encourage everyone who is able to work on these courses and earn the additional points to do so.

 

Hopefully, this policy will change and allow greater flexibility in earning points.  There is currently no information about when this policy may change.

 

Well, this article wasn’t as optimistic as I had hope when I started it.  The research into the article revealed a lot more restrictions than I had originally thought.  I said in a previous article that members could earn one point for every three hours of work and this remains true for courses completed prior to 15 April 2016, but the four-hour rule (with pay) is currently in effect.  Once the option has been opened up again, I’ll be sure to let you know.

 

Next week, I will give you a simple method you can use to estimate your retirement pay.  Please come back at that time to learn this simple technique.

 

Thanks for joining me today and, of course, thank you for your service.

 

D.J.

 

References:
Information Paper – Disparity between ARNG and Army Reserve Electronic=Based Distributed Learning (EBDL) Compensation Policy
Award of Retirement Points (extracted from National Guard Regulation 680-2 – Automated Retirement Points Accounting Management – 19 August 2011)