Objective:
Create a new retirement system where service members accrue dividend-like payouts based on their years of service, contributions, and performance, rather than relying on fixed final pay calculations like High-3 or the Blended Retirement System.
Key Components:
1. Service Dividends: Each year of service earns the member dividend credits, which are tied to a fund that grows based on both government contributions and personal performance evaluations.
2. Performance-Linked Growth: Service members who demonstrate exceptional performance or serve in high-demand roles earn higher dividends, increasing their post-retirement payouts. This creates a direct correlation between service quality and retirement rewards.
3. Market-Adjusted Payouts: The retirement fund is partially invested in market-based securities (e.g., government bonds, defense-linked funds), offering both stability and the potential for higher returns than traditional fixed pension models.
4. Portability: The system offers flexibility for those who choose to leave the military early, allowing them to cash out their accrued dividends without needing to stay for 20 years. Those who retire after 20 years or more will enjoy full dividend payouts.
5. Incentive Bonuses: Additional bonuses for achieving key milestones (e.g., 10, 15, 25 years of service) can be added to the dividend fund, incentivizing retention.
Benefits:
• Flexibility and Security: Members have control over their retirement savings, which grow over time and aren’t solely dependent on end-of-career earnings.
• Reward for Performance: The link between performance and retirement growth encourages high levels of engagement throughout a service member’s career.
• Adaptable: Service members have the flexibility to leave the military without losing all retirement benefits.
Conclusion:
The Service-Based Retirement Dividend System (SBRDS) offers a flexible, performance-based alternative to traditional retirement models, aligning long-term financial rewards with both the length and quality of service, while maintaining financial security for military retirees.