daily caller

The Pentagon just approved a major plan to reform the military retirement system by reducing current pension size by 20 percent. That plan is now in the hands of Congress.

Defense officials sent along a six-page whitepaper with the bill in an effort to help explain the policies, Military Times reports.

A blended system maintains the current, though downsized pension system, and adds individual retirement accounts for personnel, called Thrift Savings Plans (TSP). Government contributions equivalent to 1 percent of basic pay accrue to the account and cannot be withdrawn before the veteran is 59 and a half.

Contributions from personnel are automatically set at 3 percent. Opting out is possible, but personnel will first have to receive training in financial literacy. After four years of service, the government will match individual contributions to the account up to the equivalent of 5 percent of basic pay. If individuals kick in 5 percent of their pay to the account, the government will also add 6 percent of basic pay.

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