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MCRMC Retirement Proposal—More than meets the eye

Posted By Reserve Officers Association, Thursday, April 30, 2015
Updated: Friday, May 13, 2016

Three components that should be considered in judging the MCRMC retirement proposal (MCRMC final report recommendation 1):  20+ years retirement pay, Thrift Savings Pay (TSP), and Survivor Benefit Plan (SBP). 

20+ Year Retirement Pay:  The MCRMC retirement proposal reduces the annuity from 2.5 percent to 2.0 percent.  The .5 percent difference is then used by the services for the continuation pay lump-sum payment at the 12-year point.  The 0.5 percent is not lost, it is shifted to this lump-sum payment.  (There was a partial lump-sum payment for Guard and Reserve members in the MCRMC recommendation at the 20-year point, but it was not supported by the House Armed Services Committee; ROA will continue to get this provision included.)

TSP:  The MCRMC retirement proposal is a defined-contribution proposal consisting of a 20+ year retirement pay and a TSP with contributions by the servicemember of up to 17 percent and contributions by the government of up to 6 percent. 

SBP:  A third retirement factor to consider is the Survivor Benefit Plan.  SBP is an option; when the beneficiary dies, SBP payments die too.  TSP, however is similar to a 401K; it lives on; its principal and any interest continues as part of the estate, and can be willed, unlike SBP. In essence, the SBP funds the servicemember would pay to the government for them to control could now be the servicemember’s to control and manage as a TSP (if so chosen), in funds with matching contributions.

TSP/SBP Comparison


  • Can be willed to spouse and other heirs.
  • Does have the opportunity to increase in value.
  • No funds are lost if the spouse dies before the servicemember.
  • May continue to grow (market-generated growth) even without contributions.
  • Up to 6% matching funds.  The government pays you money.
  • SBP

  • Stops when your beneficiary dies.
  • Does not earn any interest or have the opportunity to grow.
  • Payments will not be repaid if beneficiary dies before the servicemember.
  • If you cancel SBP you will not get a refund.
  • Premium of 6.5% to 10% is a cost.  You pay the government money.
  • SBP Costs (Premiums)

    The SBP premiums for spouse coverage are:

    (1) 6.5% of your chosen base amount, or if less,

    (2) 2.5% of the first $635.00 of your elected base amount (referred to hereafter as the "threshold amount"), plus 10% of the remaining base amount.

    The threshold amount was $635.00 as of January 1, 2006. The threshold amount will increase at the same time and by the same percentage as future active duty basic pay.

    If you became a member of a uniformed service on or after March 1, 1990, and you are retiring for length of service (not for disability), SBP costs will be calculated only under the formula in (1) above.

    Susan Lukas
    Director, Legislative and Military Policy
    Reserve Officers Association

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