Family resources - Air Force Times

Older survivors get boost in payments

Social Security-eligible military survivors will see an increase in their survivor annuities April 1 as part of a chain of military benefits improvements taking place over the next two years.

The April 1 increase is the final phase of a 2004 plan to eliminate the old two-tier annuity plan for surviving spouses age 62 and older. This year’s change raises annuities to 55 percent of the deceased person’s retired pay — the maximum annuity level — up from the previous 50 percent.

When the phase-out began in 2005, Survivor Benefit Plan annuities equaled up to 55 percent of a deceased member’s retired pay for survivors under age 62, but dropped to 35 percent for those age 62 and older on the rationale that Social Security made up for the SBP reduction. Advocacy groups have long referred to the cut in benefits at age 62 as the “widow’s tax.”

Now, there will be no drop-off in payments for older beneficiaries.

Of the roughly 254,000 people receiving military survivor annuities, more than 230,000 are 62 or older, according to Defense Department data.

A typical survivor receives about $1,239 a month in annuities today and would receive $1,362 after the April 1 change, but the amount could be higher or lower depending on several factors, including rank, years of service and date of retirement of the deceased service member and how much coverage the couple decided to purchase.

Two more big changes in SBP are coming Oct. 1.

First, retirees age 70 and older who have paid survivor benefits premiums for 30 years or more no longer have to make payments as of that date. SBP premiums are paid through deductions in monthly retired pay, so this change will result in a retired pay boost.

Congress approved the so-called “paid-up” SBP initiative in 1998 but stalled 10 years before implementing it. The Military Coalition, an umbrella group of more than 30 military-related associations, tried repeatedly over the years to get Congress to move up the effective date, but could not budge lawmakers.

The immediate effect of the change is to end premiums for anyone who retired before Oct. 1, 1978. About 480,000 of the current 1.8 million military retirees retired before that date, but it is unclear how many enrolled in the SBP or are still enrolled.

The Defense Finance and Accounting Service said in a statement that retirees do not need to do anything; a scan of military payroll records will show who is the right age and who has been enrolled in SBP long enough to have their payments stopped.

Officials said they hope to mail out statements in May informing those retirees whose premiums will end.

Also effective Oct. 1 is the start of a $50 monthly payment, the special survivor indemnity allowance, for those who get both military and veterans’ survivor benefits.

About 52,000 survivors, mostly widows, are expected to get the pay, aimed at partly offsetting the current dollar-for-dollar reduction in military survivor benefits required of those also getting dependency and indemnity compensation from the Department of Veterans Affairs.

The $50 payment, approved in the 2008 Defense Authorization Act, is set to increase by $10 every Oct. 1 through 2012.

DISCUSS: Payment increase for survivors