Determining a Discount Rate for Calculating Lump Sum Payments to Eligible Military Retirees
The Department of Defense (DoD) established the Blended Retirement System (BRS) in fiscal year 2016. Among other provisions, the new retirement system provides military personnel who retire after 20+ years of service with an option to cash out a portion of their retirement annuity upon separation. This provision was designed to give retirees greater choice in how to realize their retirement benefit. The Secretary of Defense was responsible for determining how to calculate the lump sum payments offered, and DoD turned to IDA for assistance.