President Obama’s veto of H.R. 1735, the “National Defense Authorization Act for Fiscal Year 2016,” means that the military retirement system reform, including the proposed Thrift Savings Plan (TSP) for military members, it includes will be delayed for now.
In his veto message, the President notes that the bill has provisions he supports, but it falls woefully short in three areas – Number one, it keeps in place the sequester…Number two, unfortunately it prevents a wide range of reforms…And the third thing is that this legislation specifically impedes the closure of Guantanamo. Congress and the White House will soon come to an agreement on these issues, no doubt. Let’s just hope that the military retirement reform and its TSP component will still be there in the bill when they reach a compromise.
Military Retirement Reform Offers TSP For Service Members and Veterans
One of the key components of the National Defense Authorization Act is the authorization of government-matching TSP contributions for members of the uniformed services that will vest at the beginning of three years of service at a government matching rate of up to five percent.
The bill also authorizes the continuation of a defined benefit for those who complete at least 20 years of service, at a multiplier rate of 2.0 times years of service. It will allow the voluntary election of lump sum payments of retired pay for those serving 20 or more years of service.
Members who elect to take the lump sum may choose to take 100 percent or 50 percent of the discounted present value of their defined retirement benefit that would be due to them prior to becoming eligible for Social Security.
Under the new system, continuation pay will be available to service members who reach 12 years of service, contingent upon such members agreeing to serve another 4 years of service. A member receiving continuation pay may elect to take the continuation pay in a lump sum or in installments of not more than four payments.