MILITARY UPDATE
Overhaul of survivor benefits unlikely
Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 50, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.
By Tom Philpott
House and Senate Budget Committees have rejected as too costly a major initiative this year to improve the military Survivor Benefits Plan.
Two groups of associations — The Military Coalition and the National Military/Veterans Alliance — had sought to persuade these committees to set aside enough budget authority in 2004 budget resolutions to allow Congress to end a sharp drop in SBP annuities that occurs when survivors turn 62.
The Military Officers Association of America, formerly The Retired Officers Association, led the SBP Fix campaign for the coalition, advising retirees and survivors to bombard budget committee members with phone calls, letters and e-mails urging support for improved survivor benefits.
Bills to implement the SBP improvements — H.R. 548 introduced by Rep. Jeff Miller (R-Fla.) and S.R. 451 from Olympia Snowe (R-Maine) — are still in play, but prospects for passage this year are now dim. MOAA officials said the key to passing the proposal was to have budget committees earmark the necessary budget authority for the armed services committee to have to execute SBP reform.
On March 26, the Senate, like the House a week earlier, passed a budget blueprint with no mention of an SBP fix. Lawmakers decided the cost, estimated at $7.5 billion over 10 years, was too high.
Under SBP, retirees buy annuity protection for their survivors by forfeiting a portion of retired pay each month. When a retiree dies, the widow receives 55 percent of covered retired pay. At age 62, payments drop. The size of the drop varies, but the most common is from 55 percent down to 35 percent of the covered amount.
The Military Survivor Benefits Improvement Act of 2003 would phase out the drop in benefits, which many retirees and survivors say they knew nothing about when they selected SBP. Effective Oct. 1, 2004, the reduction at age 62 would fall only to 40 percent. A year later it would be 45 percent and so on, until by October 2008, SBP for all would be 55 percent of covered retired pay. The dip at age 62 would be gone.
The bill also would phase out the SBP supplemental annuity. Retirees buy such coverage now at a fairly high cost to avoid the step down at 62.
MOAA and other service associations argue these improvements are overdue and justified by declines over the years in the government's SBP subsidy. When the program began more than 30 years ago, premiums were set so retirees paid 60 percent of the cost and the government 40 percent. Because retirees are living longer, SBP payouts have been lower than expected and premiums continue years longer. The government's subsidy of 40 percent a year is down to 17 percent.
The shrunken-subsidy argument could still sway the House and Senate Armed Services Committees to act on the bills. What makes that unlikely is a requirement to stay under budget ceilings. The cost of improving SBP now would have to be paid for by offsets in spending elsewhere.
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