The Granite Slate
NH Counties

March 2003
Published peroidically for the information of NH Chapter of TROA members
P.O. Box 712, Dover, NH 03820
Volume 24, No. 1

Survivor Benefit Plan
(The following article is comprised of two documents from the MOAA web site, edited to eliminate duplications.  Ed.)
Unlike federal civilian annuities, the Military Survivor Benefit Plan (SBP) annuity drops significantly, from 55% to 35% of SBP-covered retired pay, for survivors attaining age 62.

When SBP was enacted in 1972, Congress intended that the government would pay 40% of the cost -- to roughly parallel the subsidy for the Federal civilian SBP.  Because of conservative actuarial assumptions, the government's cost share has declined to less than 25%.  Retirees' premiums now cover over 75% of expected long-term program costs, vs. the intended 60%.  Even worse, the military SBP annuity drops sharply for survivors attaining age 62.  Instead of providing 55 percent for life, the annuity drops as low as 35 percent for survivors age 62 or older.  Many retirees and survivors weren't told of the age-62 reduction when they signed up for SBP in the 1970’s, and are shocked to learn of it.

In contrast, the federal civilian SBP enjoys a 33% subsidy for employees under the 1984 Federal Employees Retirement System (FERS).  For those under the pre-1984 Civil Service Retirement System (CSRS), the subsidy is 48%.  Further, FERS survivors receive 50% of retired pay for life, and CSRS survivors receive 55%, with no reduction at age 62.  Although federal civilian premiums are 10% of retired pay compared to 6.5% for military retirees, military retirees pay SBP premiums for far longer than most civilians because they are required to leave service at a younger age.

Fully eliminating the post-62 offset would cost about $599M per year.  Having been stymied for years by the cost of full repeal, MOAA and The Military Coalition (TMC) support legislation to balance cost and equity concerns by phasing in increases in the age-62 annuity from 35% to 40% on Oct. 1, 2004; to 45% on Oct. 1, 2005; 50% on Oct. 1, 2006; and then to 55% Oct. 1, 2007.  To help offset the cost and protect more survivors, MOAA and TMC recommend including an “open season” provision to allow retirees not currently enrolled in SBP to enroll.  By reducing retired pay outlays (SBP premiums are deducted from retired pay), the open season would generate offsetting savings of $524M over five years.

(Continued on page 7)

Chapter Officers
President LCDR Paul L. Bernard, USN (Ret) (603) 229-1334
Vice President LTC John A. Graham, USA (Ret) (603) 472-4637
Secretary MAJ Patricia A. Graham, USA (Ret) (603) 472-4637
Treasurer 1stLt Arnold C. Sayer, USAF (Ret) (603) 763-2057

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