The RESOURCES Act would give servicemembers and their families a fair shot at accessing retirement benefits that they’re entitled to and bolster financial training efforts within the armed services
More than half of military and veteran families are unprepared for a financial emergency or a significant loss of income – MORE HERE from the Military Family Advisory Network
Senator Murray: “Servicemembers and their families sacrifice so much to keep us all safe, and the last thing they should have to worry about is how they’ll get by once they have completed their service”
(Washington, D.C.) – U.S. Senator Patty Murray (D-WA), a senior member of the Senate Veterans’ Affairs Committee, today introduced the Re-Open Enrollment for Servicemembers to Opt-In to Updated Retirement Choice for Enduring Security (RESOURCES) Act of 2020—new legislation that would promote financial security for military families by improving financial training and re-opening the enrollment period for certain members to opt-in to the new Blended Retirement System (BRS).
“Servicemembers and their families sacrifice so much to keep us all safe, and the last thing they should have to worry about is how they’ll get by once they have completed their service,” Senator Murray said. “The RESOURCES Act is an important step we must take for military families in Washington state and across the country to ensure that they have all of the necessary tools, opportunities, and knowledge to not only manage their current financial situations, but also effectively plan for the future.”
While the Department of Defense (DoD) has taken some important steps to address the financial challenges that servicemembers and their families face, more action is needed. For example, the new Blended Retirement System (BRS) available to servicemembers, made law through the fiscal year 2016 National Defense Authorization Act, was an important development in helping members of the military and their families save for the future. Prior to the new BRS, in order for servicemembers to collect retirement they had to serve at least 20 years, which historically has led to only 19% of active duty servicemembers ultimately receiving retirement funds.
When given the option to switch to the new BRS though, most of those eligible did not enroll, despite the fact that it would be the more financially sound retirement option for them. According to Stars and Stripes, for eligible servicemembers in the active duty component, only 25% of the Army, 29% of the Air Force, and 32% of the Navy opted in to BRS, and for the reserve components, only 10% of eligible Army reservists, 11% of Air Force reservists, and 11% of Navy reservists opted in. In stark contrast, the Marine Corps, which required each eligible servicemember to make an affirmative decision on which retirement plan they wanted as opposed to the other services which defaulted servicemembers into the legacy retirement system unless they indicated otherwise, had over 59% of eligible active duty Marines opt in to BRS, and 39% of eligible of reservists opt in.
According to the Government Accountability Office (GAO) and testimonies from financial counselors, servicemembers, and their families, a significant reason that so many servicemembers did not opt in to the BRS was a lack of adequate and effective outreach and training about its benefits. This is reinforced by a 2019 survey sponsored by the Military Family Advisory Network (MFAN), in which over 44% of survey respondents did not know which retirement plan they had chosen. Of those respondents, 26.4% would change retirement plans if given the option.
To that end, in order to help strengthen the financial readiness and resiliency of military families and improve access to the BRS, the RESOURCES Act would:
- Establish a new election period for the Blended Retirement System,
- Require additional, improved training on the Blended Retirement System,
- Expand and enhance other financial training available to servicemembers and their families,
- Create a DoD Advisory Council on Financial Readiness,
- Require financial counseling for servicemembers receiving loans from Military Welfare Societies, and
- Enact additional disclosures and greater transparency surrounding lump sum payments.
“The Military Family Advisory Network (MFAN) is honored to serve as a trusted voice of military families who share their experiences with us through scientific research. According to data from MFAN’s 2019 Military Family Support Programming Survey, more than half of military and veteran families are unprepared for a financial emergency and nearly a quarter of respondents had no practical or viable plan of action for seeking assistance in a financial emergency,” Shannon Razsadin, Executive Director of the Military Family Advisory Network (MFAN), said. “Family finances, emergency savings, and overall financial health are perennial issues that impact the overarching quality of life for military families. This proposed legislation would help ensure servicemembers and their family members can effectively utilize and understand the military retirement system, as well as help our military families build greater long-term financial literacy, stability, and resiliency.”
“The Association of Military Banks of America is proud to support this legislation intended to remedy a number of shortcomings identified in the initial implementation of the Blended Retirement System. As the trade association representing the banks operating on military installations and banks committed to providing safe, accessible, and reliable financial services to our military and veteran communities, AMBA is mindful of the fact that over 80% of men and women who join the military do not retire after 20 years of service. Prior to the Blended Retirement System, these veterans departed military service with no financial retirement benefits. Unfortunately, the first round of BRS implementation failed to achieve anticipated or desired levels of participation. Many service members and their families were informed of the program but lacked the personal advice necessary to tailor the information to their individual financial circumstances. This bill will provide a second round of BRS enrollment and, hopefully, will encourage DoD to engage in the public-private partnership that has proven to be so successful in other matters involving the financial readiness and resilience of our force,” said Steven J. Lepper, President and CEO of the Association of Military Banks of America.
According to the 2019 MFAN Survey, more than half of military and veterans’ families are unprepared for a financial emergency or a significant loss of income, and nearly a quarter of respondents had no practical or viable plan of action for seeking assistance in a financial emergency. For active duty military, this financial stress can have a direct impact on mission readiness, and for veterans, experiencing even relatively minor financial problems, has led to increased likelihood of experiencing homelessness. Additionally, the COVID-19 pandemic, which has led to massive unemployment and economic depression, has only served to exacerbate these issues, and places even greater importance on short and long term financial security for servicemembers and their families.
The daughter of a World War II veteran and the former head of the Senate Veterans’ Affairs Committee, Senator Murray has long been a champion for servicemebers, veterans, and military families in Washington state and across the country. Last year, Senator Murray secured a dedicated line of funding for military child care center construction that will pave the way for more than $120 million in critical federal investments to increase vital access to child care across all the services and ensure families are getting the support they need to succeed. Additionally, she has successfully worked to expedite federal hiring processes for military spouses, and bolster outreach to servicemembers, veterans, and their families so they know about the resources and programs, including financial training programs, they may already have access to.
Read a breakdown of the RESOURCES Act HERE.
Read the bill text HERE.
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