Defense Auth Bill Includes New TSP Plan and Military Pay Raise


Major changes to Dept. Of Defense funding, retirement plans and payscale have been approved in the National Defense Authorization Act bill approved by House and Senate negotiators.

The bill authorizes a new blended retirement system to replace the current military retirement benefits plan that only becomes available after 20 years of service. Only about 17% of service members stay that long, so the new blended retirement plan is meant to encourage service members to stay longer.

Those who join the military will now be automatically enrolled into the Thrift Savings Plan (TSP) and will receive matching contributions from their employing agency, just like civilian federal employees. It begins with a 1 percent DoD contribution, and rises to up to 5 percent of basic pay after completion of four years of service and continuing through separation or retirement.

The TSP plan has a Continuation Pay bonus that would be available to members after 12 years of service. The retirement benefits for current military members gets reduced by 20 percent, but an immediate annuity will be available to military retirees after 20 years or more of service.

Military Gets a 1.3% Pay Raise and 25% Workforce Reduction

The Defense authorization bill also approves a 1.3% pay raise for military members. Civilian federal employees have already received the same 1.3% payscale increase through an Executive Order issued by the President little more than a month ago.

The bill also requires DoD to reduce its workforce by 25% over the next five years, with the aim of achieving $10 billion in spending cuts. The DoD had already initiated a 20% workforce reduction as a preemptive measure, no doubt in the hope that Congress would consider it to be satisfactory.