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How does the TSP differ from the Military Retirement System?

April 26, 2017differ Military retirement system TSP

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How does the TSP differ from the Military Retirement System?

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Military retired pay is a defined benefit program. This means that the benefit you receive from the military retirement system is based on your years of service and the rank you hold at the time of your retirement, rather than on the amount of your contributions and earnings. The TSP, on the other hand, is a defined contribution plan. The balance in your TSP account will depend on how much you have contributed to your account during your working years and the earnings on those contributions. Participation in the TSP is optional and not automatic. You must sign up with your service to participate in the TSP. You contribute to the TSP from your own pay, and the money you contribute and the earnings on your contributions belong to you. They are yours to keep even if you do not serve the 20 years ordinarily necessary to receive military retired pay.