Plan’s changes don’t benefit spouses

By John Fondrick

All the hoopla over the military’s Survivor Benefit Plan breaks down to political votes and whose pocket it will come out of.
This is do-nothing, feel-good legislation so politicians can say “Look what I did for the veterans. Vote for me.”

In reality, plans that call for increasing SBP benefits from 35 percent to 55 percent at age 62 will simply transfer the obligation of paying the difference from the Social Security Administration (SSA) to the Department of Defense (DoD).

There will be no increase for the widow.

DoD is against this. I wonder why?

Press releases talk about the “SBP offset” as unfair because when the military retiree dies, the survivor receives 55 percent of the retiree base pay until the survivor reaches age 62. Then it is reduced to 35 percent.

Some claim this is unfair because this reduction was not fully explained to the retiree. This is not unfair. It’s the insurance policy the retiree bought. The unfair part comes later.

The proposed legislation calls this an offset and proposes the reduction be done away with. This is not an offset. This is a scheduled reduction in coverage.

Age 62 was chosen as the reduction date because at age 62 the survivor is also eligible to apply for Social Security benefits.

The survivor would draw those benefits based on their eligible quarters, and benefits would increase based on the deceased retiree’s quarters.

But SBP and SSA are two separate programs paid for by the retiree. The problem starts when both programs are butted up against each other. That’s when SPB benefits offset Social Security benefits.

Simply put, if you are to receive $100 from SSA and you have SBP, then SBP pays $35 and SSA pays $65 for the total of $100.

If the system is changed, $55 will be paid by SBP and $45 will be paid by SSA. It still adds up to $100.

Changing the law so SBP does not reduce to the 35-percent rate will be of no benefit to the widow. The 55 percent still will be offset by the Social Security benefit.

Does your IRA or 401K offset your Social Security benefits? How about your retirement? You pay into these separately, and they do not offset Social Security.

The reduction is not what needs to be changed. The fact that SBP offsets SSA is what needs to be changed.

Today we hear DoD leaders are trying new ways to sabotage this effort. Well, it’s no wonder! They realized the DoD budget will have to cover costs that will be shifted to them from SSA.

The veteran paid into both plans. The widow should collect on both plans.

John Fondrick is the Clovis service officer with New Mexico Department Of Veteran Services. Call him at: 762-6185.