Financial wellness education is increasingly a focus for retirement plan sponsors in the private sector, but a new report suggests military members who have recently switched to the Federal Thrift Savings Plan (TSP) need the same type of education.

Service members who entered military service on or after January 1, 2018, are offered a new military retirement system that replaces the traditional 20-year pension with a blended program that includes a reduced pension in exchange for a lump-sum bonus and a new matching funds program through the TSP. A 2016 white paper from First Command Financial Services, Inc. suggested that service members who fail to save a sufficient portion of their basic pay and all of their lump sum bonus—and invest both in recommended fund offerings through the TSP—are at risk of receiving monthly retired pay that could be considerably smaller than the size of monthly paychecks under the previous 20-year pension.

At the time, Scott Spiker, CEO of First Command, said, “Success will depend on adopting the types of strong personal financial choices and behaviors that often run counter to the temptations of our instant-gratification society.” And, First Command noted that the new retirement system features financial education to help service members take a stronger role in pursuing their financial security in retirement.

However, a Government Accountability Office (GAO) report announced by Senators Patty Murray, D-Washington, ranking member of the Senate Health, Education, Labor, and Pensions (HELP) Committee, and Dick Durbin, D-Illinois, found that some of the Department of Defense’s (DOD) financial education efforts generally lacked any assessment component that could be used to ensure the trainings were effective or to improve future financial preparedness efforts for servicemembers.

After assessing the DOD’s implementation of a new military retirement system and its efforts to educate and prepare servicemembers to make decisions with long-term implications for their financial wellbeing, the GAO made three recommendations:

The Secretary of Defense should evaluate the results of its financial literacy training assessments to determine where gaps in servicemembers’ financial knowledge exist and revise future trainings to address these gaps;

The Secretary of Defense should provide servicemembers with disclosures that explain key pieces of information about the lump-sum payment, including some measure of its relative value, the potential positive and negative financial ramifications of choosing the lump-sum payment option, and a description of how it was calculated; and

The Executive Director of the Federal Retirement Thrift Investment Board should work with the Secretary of Defense to explore alternative options (including online resources) for servicemembers to receive their initial Thrift Savings Plan password so that servicemembers can access and manage their online accounts without added delays.

Some examples of financial literacy challenges of military members, according to the GAO are understanding the training due to a low initial level of financial literacy and relating to long-term goals of retirement due to short-term life goals. These are similar to findings about the American population in general.

In June, The Securities and Exchange Commission (SEC) introduced its Military Service Members’ Initiative. The initiative will increase proactive outreach to educate servicemembers and veterans about savings and investment, investment fees and expenses, retirement programs and the red flags of investment fraud.