Blended Retirement: Continuation Pay

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One of the major changes in the military's new Blended Retirement System (BRS) is the introduction of continuation pay.  Continuation pay is a mid-career bonus payment given in exchange for an agreement to serve at least another three years.  

Who Is Eligible for Continuation Pay?

Any military member who is enrolled in the BRS is eligible for continuation pay. Both active and reserve components are eligible. Each branch gets to determine the exact timing of continuation pay, but it is offered between years 8 and 12 of service.  You must commit to at least an additional 3 years of service to receive continuation pay.

The timing is based upon your Pay Entry Base Date (PEBD.)  For most service members, PEBD is the same as the amount of time they've served, but special situations exist.  

How Much Is Continuation Pay?

The amount of continuation pay is determined by the individual service, and most experienced military benefits folks expect that it will ebb and flow with retention needs.   For active duty members, it will be at least 2.5 times monthly base pay and no more than 13 times monthly base pay.  For reserve members, it will be at least .5 times monthly base pay, based on active duty pay charts, and no more than 6 times monthly base pay.

Check out the current continuation pay amounts.

Can I Receive Continuation Pay In Addition To Other Bonuses?

Yes. But, like your bonuses, continuation pay is taxable.

Can I Invest My Continuation Pay In My Thrift Savings Plan?

Yes, but you must remember that if you hit the TSP maximum contribution amount before the end of the calendar year, you could lose out on matching contributions.

What Happens If I Take Continuation Pay But Don't Complete My Obligation?

If you do not complete the obligated service, you may be required to repay some or all of your bonus.  There will be exceptions for special situations where you are unable to complete your obligated service.  Many of these repayments will be determined on a case-by-case basis.

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