The Survivor Benefit Plan SBP

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The Survivor Benefit Plan(SBP)

• Ending SBP-DIC Offset Fixing Paid-up SBP

2
Didnt We Fix SBP?

• Passed Law Last Year Phasing Out Age-62 SBP
  Widows Tax
• But Two Major SBP Inequities Remain
• - SBP-DIC Offset
• - 2008 Effective Date for Paid-Up
• SBP (Greatest Generation Tax)

3
Issue 1The SBP-DIC Benefit Offset
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SBP-DIC Offset

• SBP Paid by DoD
• 55 of Covered Retired Pay for Survivors of
  Retired Members
• 41 of High-3 Base Pay For Survivors of Active
  Duty Deaths
• DIC Paid by VA if Death is
• Service-Connected
• Flat Rate for All (993/Mo)

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SBP-DIC Offset (cont)

• DIC Now Deducted from SBP Dollar For Dollar
  (993/Mo)
• Wipes Out SBP for E-6 and Below Active Duty
  Deaths
• Can Assign SBP to Children
• Only AD Deaths since 11/24/03
• Lose All SBP When Child Matures

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DIC Should be Added to SBP, Not Substituted for It
DIC 11,916
DIC 11,916
E-6 SBP 11,916
E-6 SBP 12,810
SBP 894
Survivors Should Get
But Only Receive
They Lose
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Survivor Annuity, Active Duty Death(Spouse, No
Children)

• Net After
• SBP DIC DIC Offset Lost SBP
• O-4, 14 Years 24,924 11,916 24,924 11,916
• 0-3, 4 Years 13,802 11,916 13,802 11,916
• E-6, 14 Years 12,810 11,916 12,810 11,916
• E-4, 4 Years 7,447 11,916 11,916 7,447

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Survivor Annuity, Active Duty Death(Spouse and
10-Year Old Child)
O-4, 14 Yrs
O-3, 4 Yrs
E-6, 14 Yrs
E-4, 4 Yrs
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SBP-DIC Offset (Retiree Deaths)

• SBP DIC Paid for Different Reasons
• SBP is Purchased Insurance
• DIC Should Be Added Indemnity for Service-Caused
  Death
• Survivors of Fed Civ Vets Dont Forfeit SBP When
  DIC Payable

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Why Cut Retiree-Paid SBPfor Service-Caused Death?

• Retiree SBP Left
• Purchased After Lost
• SBP DIC DIC Offset SBP
• 0-5, 22 Years 23,820 11,916 11,904 11,916
• E-8, 22 Years 12,636 11,916 720 11,916

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Issue 2The SBP Greatest Generation Tax
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Greatest Generation Tax

• 1998 Law Authorized Paid-up SBP
• If Age 70 and Paid 30 Yrs Premiums
• But Delayed Eff. Date to 2008
• Greatest Generation Retirees Who Enrolled in
  1972 Must Pay 36 Years
• Already Paid Years of Higher Premiums
• Many Also Paid into Earlier Program

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The 27K SPB Premium Penalty(27 Year O-5
Enrolled in 1972 vs. 1978)
Cumulative Premiums Paid
2005
2008
1972
1978
1990
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Why a 34 Greatest Generation Tax?

• Total
  Premiums Paid As Of
• October 2005 October 2008
• O-5 Retired 94,700 106,000
• October 1972 (33 years) (36 years)
• O-5 Retired N/A 79,200
• October 1978 (27 years) (30 years)
• Greatest 18 34
• Generation Tax

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How Many Are Affected?

• Retirees Enrolled
• 1972 1977 DIC/SBP Survivors
• 198,000 55,000

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The Fix

• HR 808 - Rep Henry Brown
• Repeal SBP-DIC Offset
• HR 968 - Rep Jim Saxton
• Move Up Paid-up SBP Effective Date to Oct 1, 2005

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How Much Will It Cost?( Million)

• 10-Year
• FY06 FY07 FY08 FY09 FY10 Total
• SBP/DIC 452 486 520 555 590 6,060
• Paid-Up SBP 140 143 146 0 0 429
• Total 592 629 666 555 590 6,489

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What Representatives Can Do

• Cosponsor Rep Browns H.R. 808 and Rep Jim
  Saxtons HR 968
• Support in Budget Resolution and Defense
  Authorization Act