WASHINGTON — The Pentagon wants to upgrade its new retirement package, set to debut Jan. 1, so the military's longest-serving enlisted personnel have greater incentive to remain in uniform.

Introduced in late-May, the proposal calls for removing eligibility limits on the dollar-for-dollar contributions that will be made to troops' 401(k)-style investment accounts, a key feature of the Defense Department's new "blended" retirement plan. Current rules halt those payments once personnel reach 26 years of service. By lifting that cap, careerists who ascend to the military's senior-most ranks could collect tens of thousands of dollars in additional retirement savings depending on the stock market's performance over time.


Officials view the initiative as a means to help retain those who hold influential positions throughout the armed forces, men and women who've amassed deep expertise in their occupational fields or serve as key advisers to the military's senior commanders.

"We believe that, in the future, this will help to encourage our most experienced and capable enlisted members to stay in the military to fill critical leadership positions," said Johnny Michael, a Pentagon spokesman.

Explainer: the military's new retirement system

Coming changes to the military's retirement system will impact how most troops invest in their future.


Defense Department officials included the proposal in their budget request for fiscal 2018. The spending blueprint will be dissected in both houses of Congress throughout the coming weeks, though it's unclear how lawmakers will look upon the recommendation. 

The Pentagon tried unsuccessfully during the last two budget cycles to extend TSP contributions for all service members serving beyond 26 years. By limiting their request now only to enlisted troops, officials may increase their odds of success. 

The recommendation comes as hundreds of thousands of service members face a difficult decision. They can either opt into the new retirement plan, which reduces lifelong pension payouts by 20 percent while offering matching cash contributions of up to 5 percent of basic pay for individuals who invest in the government's Thrift Savings Plan. Or they can exercise their right to a grandfather clause and remain on course to collect the full, time-tested pension. 

Though the blended retirement package will be the only option offered to troops who join the military after Jan. 1, those with less than 12 years of service come Dec. 31 must choose.

As such, the proposal to extend matching TSP contributions "will have very limited impact on the opt-in population in the immediate future," Michael said. But it will almost certainly factor into their decision-making in the weeks and months to come. 

Troops will have all of 2018 to make their choice. And at the behest of DoD, the military services have begun introducing various programs and tools to educate the force about its options and how individuals can grow their retirement savings through the new program. 

Budget documents indicate there are an estimated 1.75 million troops eligible to opt in. As of April 30, more than 172,000 had completed an online explanatory course, Michael said, noting that training, especially for reservists and members of the the National Guard, is expected to pick up throughout the summer. 

"We anticipate this number to significantly increase in the coming months," he added. "There is still plenty of time to complete the training before January 1, the earliest date an eligible service member can opt in."


Andrew deGrandpre is Military Times' senior editor and Pentagon bureau chief. On Twitter:  @adegrandpre.