1. Career Development Training Course
Survivor Benefit Plan
1

2. Survivor Benefit Plan
Enabling Objectives
Upon successful completion of this topic,
the trainee will be able to:
 IDENTIFY the purposes of the Survivor
Benefit Plan (SBP).
 IDENTIFY the benefits of the SBP.
 IDENTIFY the SBP basic mechanics.
 LIST the SBP eligibility requirements.
 LIST the categories of SBP coverage.
2

3. Survivor Benefit Plan
Enabling Objectives (cont.)
 IDENTIFY the features of each category
of SBP coverage.
 IDENTIFY the steps to calculate the SBP
premium.
 IDENTIFY the steps to calculate the SBP
annuity.
 LIST the online source that estimates the
SBP annuity.
 IDENTIFY the Dependency and Indemnity
Compensation (DIC) offset process.
3

4. Survivor Benefit Plan
Enabling Objectives (cont.)
 STATE the advantages of COLA
adjustments to the SBP annuity.
 STATE the tax implications of the SBP
premiums and annuities.
 IDENTIFY the features of the Reserve
Component SBP.
 IDENTIFY the SBP election procedure.
4

5. Survivor Benefit Plan
Reference Publications
 BUPERSINST 1750.11, Survivor Benefit
Plan (SBP)
 NAVADMIN 065/03, When Active Duty
Member Dies
 DOD 7000.14-R, DOD Financial
Management Regulations, Volume 7B,
Chapters 42-58
 DOD Instruction 1332.42, Survivor Annuity
Program Administration
 DOD Directive 1332.27, Survivor Annuity
Programs for the Uniformed Services
5

6. Survivor Benefit Plan
Reference Publications (cont.)
 Department of Veterans Affairs website:
http://www.va.gov
 Air Force Personnel Center website:
https://w11.afpc.randolph.af.mil/retsepcalcne
 Office of the Actuary website: http://
www.defenselink.mil/actuary/
6

7. THE BOTTOM LINE
RETIRED PAY
STOPS
WHEN THE RETIREE DIES!
7

8. Survivor Benefit Plan
Purpose of SBP
 When a military retiree dies,
retirement pay stops.
 The Survivor Benefit Plan (SBP) is a
voluntary program that allows a
military retiree to provide an
annuity of up to 55% of gross
retired pay to eligible designated
beneficiaries.
8

9. Survivor Benefit Plan
Benefits of SBP
 SBP is the only means by which a
portion of retired pay can be
continued for eligible survivors.
 The premiums are tax-free and the
annuity is COLA-adjusted to protect
future buying power.
 Eligibility is not dependent on risk
factors such as age or health.
9

10. Survivor Benefit Plan
Benefits of SBP (cont.)
 There are no hidden costs or extra
fees.
 The annuity continues for the life of
the beneficiary as long as they
remain eligible.
10

11. Survivor Benefit Plan
Basic Mechanics of SBP
 The “base amount,” which is the
dollar amount upon which the
annuity will be based, is elected by
the retiree at retirement.
 This amount may range from $300
up to retiree’s full gross retired pay.
 The monthly payable annuity and
11

12. Survivor Benefit Plan
Service Member Eligibility
 Upon retirement
 Upon transfer to Fleet Reserve
 Sailor placed on Temporary
Disability Retirement List (TDRL)
 Death of Sailor on active duty
12

13. Survivor Benefit Plan
Service Member Eligibility (cont.)
 Sailors currently on active duty are
automatically covered by SBP at the
maximum level (NAVADMIN 065/03).
 The Reserve Component Survivor
Benefit Plan (RCSBP), is available
for members of the Naval Reserve.
13

14. Survivor Benefit Plan
Categories of Coverage
 Spouse Only
 Spouse and Child(ren)
 Former Spouse
 Former Spouse and Child(ren)
 Child(ren) Only
 Natural Person with Insurable
Interest (NIP)
14

15. Survivor Benefit Plan
Spouse Only Coverage
 Must be married at time of retirement.
 If married after retirement, must have
been married for one year.
 If Sailor loses spouse and remarries,
new spouse is automatically eligible
after one year unless retiree declines
coverage.
 Decision to resume coverage must be
made in first year of marriage.
15

16. Survivor Benefit Plan
Spouse Only Coverage (cont.)
 Receives annuity for life or until
remarriage, if prior to age 55.
 If remarriage later ends (i.e. death,
or divorce), entitlement may be
restored.
 Remarriage after 55 does not
terminate entitlement.
16

17. Survivor Benefit Plan
Former Spouse Coverage
 Retiree’s may voluntarily elect SBP
coverage for former spouses.
 State courts are permitted to order
Sailors to provide former spouse
coverage for court orders issued on
or after 14 November 1986.
 Former spouses are also ineligible
if they remarry prior to age 55.
17

18. Survivor Benefit Plan
Former Spouse Coverage (cont.)
 If a Sailor divorces after retirement,
the marriage must have lasted at least
one year to establish eligibility.
 Former spouse elections are
permanent and irrevocable, with a few
exceptions (e.g., retiree obtains a new
court order allowing coverage of the
new spouse). Always consult a
competent attorney.
18

19. Survivor Benefit Plan
Former Spouse Coverage (cont.)
 SBP premiums are calculated using
the same method as spouse only
coverage.
19

20. Survivor Benefit Plan
Children Only Coverage
 Annuity goes to eligible child(ren) if
elected. If married, spouse
concurrence with the “child(ren) only”
election is required.
 Child(ren) remain eligible until age 18,
or 22 if full-time unmarried students.
 Child(ren) incapable of support are
eligible as long as incapacitation
exists or until marriage.
20

21. Survivor Benefit Plan
Children Only Coverage (cont.)
 An incapacitated child who loses
eligibility due to marriage can
regain eligibility if marriage is later
annulled. Divorce would not
restore eligibility!
21

22. Survivor Benefit Plan
Children Only Coverage (cont.)
 Annuities are 55% of retiree’s “base
amount” as long as eligible:
 Is not reduced because of concurrent
government benefits.
 Is equally divided among eligible
children.
 Is paid to parent or guardian until age
18 or age of maturity.
22

23. Survivor Benefit Plan
Children Only Coverage (cont.)
 A retiree with no dependent
children at retirement may add
children later, but they must be
added within one year of birth or
adoption.
 SBP premiums are based on the
base amount times an actuarial
factor (based on Sailor’s age and
youngest child).
23

24. Survivor Benefit Plan
Spouse/Former Spouse and Children
Coverage
 Eligibility requirements are the
same as spouse/former spouse.
 Children coverage same as
child(ren) only coverage with one
exception:
 Only children acquired during
marriage to former spouse can be
covered. Children cannot be added
after the divorce.
24

25. Survivor Benefit Plan
Spouse/Former Spouse and Children
Coverage (cont.)
 SBP premiums calculated by
adding the spouse/former spouse
premium and a small charge based
on the age of Sailor, spouse, and
youngest child.
 Children only receive benefit if
spouse loses eligibility or dies.
25

26. Survivor Benefit Plan
Natural Person with Insurable Interest
(NIP)
 Allows retirees without a spouse or
dependent child(ren) to elect
coverage for a person who has a
bona fide financial interest:
 Need not be a dependent.
 May be a close relative, a child, or a
close business associate.
26

27. Survivor Benefit Plan
Premium Calculation
 Automatically deducted from retirement pay
Basic formula BA x .065 = Premium
 Sailors who entered active duty on or after 1
March 1990: The premium is 6.5% of the
elected base amount.
 Sailors who entered active duty before 1
March 1990: The premium is either:
 6.5% of the elected base amount OR
 2.5% of the first $675 of the base amount,
plus 10% of the remaining base amount, if
the base amount is less than $1,275.
27

28. Survivor Benefit Plan
Insurable Interest Premiums
 Premiums are 10% of the retiree’s
gross retired pay, plus an additional
5% for each five full years the
annuitant is younger than the
retiree.
 Premium costs cannot exceed 40%
of the Sailor’s gross retired pay.
28

29. Survivor Benefit Plan
Annuity Estimates Online
 https://w11.afpc.randolph.af.mil/retsep
29

30. Survivor Benefit Plan
Annuity for Persons with Insurable
Interest
 The payable annuity is 55% of retiree’s
full retired pay after the premium cost
is deducted. Sailors are not permitted
to elect reduced base amount.
 There is no offset for other
Government benefits to which the
annuitant is entitled.
 A retiree may terminate insurable
interest coverage at any time.
 If retiree marries, they may elect to
enroll a new spouse and/or children.
30

31. Survivor Benefit Plan
Dependency and Indemnity
Compensation (DIC) Offset
 DIC is paid to a widow by VA when a death
is considered service-connected.
 When a surviving spouse is entitled to
both SBP and DIC, the SBP annuity is
reduced dollar for dollar by the amount of
the DIC.
 DIC is not taxable.
 If a surviving spouse loses DIC eligibility,
SBP may be paid provided the eligibility
criterion is met.
31

32. Survivor Benefit Plan
Cost of Living (COLA) Adjustments
 SBP annuities and premiums are
adjusted at the same time and the
same percentage as retired pay.
 This benefit protects the
purchasing power of the survivor’s
annuity.
32

33. Survivor Benefit Plan
Tax Implications
 SBP premiums are not taxable
income. This factor makes the
actual cost for SBP even less
expensive.
 The SBP annuity is taxable income
for federal tax purposes, though
some states exempt SBP annuities
in whole or in part.
33

34. SBP’s Real Cost
NO SBP* SBP
Retired Pay $2,000 $2,000
SBP Cost $ 0 $ 130
Taxable Pay $2,000 $1,870
Tax Paid (28%) $ 560 $ 524
Annuity $ 0 $1,100
* This non-participant actually “pays” $36/mo in
the form of unrealized tax savings—survivor
gets $0.
34

35. Survivor Benefit Plan
Reserve Component SBP
 Must have 20 years of qualifying service.
 Must make election within 90 days of
receiving eligibility notice for retired pay.
 Three options:
 Decline RC-SBP- Defer enrollment until
eligible for SBP at age 60.
 Elect annuity to begin at death or age 60,
whichever occurs later.
 Elect annuity to begin at death, regardless of
age.
35

36. Survivor Benefit Plan
Reserve Component SBP (cont.)
 Premiums not paid until retired pay
commences.
 Cost is same as SBP plus an
actuarial charge.
 Beneficiary eligibility is same as
SBP.
 Naval Reserve Personnel Center
provides instruction booklet.
36

37. Survivor Benefit Plan
SBP Elections
 Use DD Form 2656.
 Spousal concurrence required if
election is anything less than full base
amount.
 Witnessed by notary public.
 Completed NLT 45 days prior to date
eligible to receive retainer/retirement
pay.
 If no election made, automatically
enrolled at full coverage.
37

38.  A “JOINT” Decision For
Married Sailors Who . . . .
 Decline coverage
 Cover less than full retired pay
 Elect “child only”
 It is the Sailor’s election:
 The spouse can only concur or
not concur.
38

39. Survivor Benefit Plan
Benefits of SBP Recap
 SBP is the only means by which a
portion of retired pay can be
continued for eligible survivors.
 The premiums are tax-free.
 Eligibility is not dependent on risk
factors such as age or health.
 There are no hidden costs or extra
fees.
 The annuity continues for the life of
the beneficiary as long as they remain
eligible.
39

40. Survivor Benefit Plan
SBP Recent Changes
DFAS Release 0308-002:
 Retirees who are at least 70 years old
and have paid at least 360 months of
premiums on 1 October 2008, will
have their monthly payments
terminated.
 If a retiree does not meet both of the
above criteria, the premiums will stop
when the retiree has met both criteria:
 Reaches age 70.
 Pays SBP premiums for 360 months.
40

41. Survivor Benefit Plan
SBP Recent Changes (cont.)
NAVADMIN 134/08, Death Gratuity
Beneficiary Designation:
 Effective 1 July 2008.
 Sailors may designate 100% of the
death gratuity in 10% increments to
one or more beneficiaries.
 Should a married Sailor designate any
person other than the spouse to
receive any portion of the death
gratuity, the spouse will be notified in
writing.
41

42. Survivor Benefit Plan
SBP Recent Changes (cont.)
NAVADMIN 134/08 (cont.)
 If a Sailor does not designate a beneficiary or
only designates a portion of death gratuity to a
beneficiary, the portion not covered shall be
paid in the following order:
(1) Surviving spouse
(2) Surviving children and the descendants of
any deceased children
(3) Surviving parents
(4) Duty-appointed executor or administrator of
the estate
(5) Other next of kin entitled under the laws of
the domicile of the Sailor at time of Sailor’s
death
42

43. Survivor Benefit Plan
Summary and Review
 What are the election options under
SBP?
 When must you make your election to
participate under SBP? What form
must you use?
 How are premiums paid under SBP?
 What is the formula to compute an
annuity for spouse coverage?
 A widow is eligible to receive an SBP
annuity as long as he/she remains
unmarried until what age?
43

44. Remember :
THE BOTTOM LINE
RETIRED PAY
STOPS
WHEN THE RETIREE DIES!
44