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Proposal would revamp Survivor Benefit Program

Mar. 6, 2014 - 07:28PM   |  
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A Defense Department proposal to revamp its Survivor Benefit Program would save money by increasing the premium that retirees pay for coverage.

The SBP is provided at no cost to active-duty troops. Retirees also can purchase it to ensure monthly military pension checks continue coming to their spouse in the event of their death.

The new Pentagon proposal, part of a broader plan to overhaul the military retirement system, calls for raising the premium cap for retirees from 6.5 percent of each monthly retirement check to 10 percent. At the same time, the maximum payout for beneficiaries would be reduced to 50 percent of retired pay, down from the current payout of 55 percent.

The proposal also would limit retirees to two basic options:

■ A “full benefit” that would cost 10 percent of gross monthly retirement pay and would continue to pay beneficiaries 50 percent of the military pension.

■ A “half benefit” that would cost 5 percent of gross monthly retirement pay and continue paying beneficiaries 25 percent of the military pension.

The proposal was included in a report the Pentagon sent to Congress March 6 outlining potential changes to the entire military retirement system.

The new proposal also calls for eliminating the offset policy that reduces SBP payments if the survivor is also receiving benefits from the Veterans Affairs Department. That means the net value of a total survivor benefit may increase in some cases.

The report notes that survivors also would benefit from the related proposal to shift some of the military retirement benefit away from fixed-income pensions and into a civilian-style investment account that is owned by the service member or retiree. Any funds remaining after death can be passed along to family members.

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