Military Update: DOD: SBP reform on shaky ground
Defense officials, in a late-hour attempt to persuade senators not to join the House in voting to raise military survivor benefits, said the case for doing so has been built on a series of “mistaken assertions.”
They also cautioned senators about the cost of enhancing the Survivor Benefit Plan — $5 billion in defense spending over 10 years and a $20 billion increase in unfunded liabilities for the military retirement fund.
They warned that the “open season” planned for nonenrolled retirees, if benefits are improved, could cause resentment among current SBP participants because the late enrollment penalty would be modest, no more than an extra 4.5 percent added to the current 6.5 percent premium.
Lee Lange, a survivor benefit expert with Military Officers Association of America, said he disagreed with many of the arguments being made to the Senate Armed Services Committee as a floor vote neared.
MOAA, the Fleet Reserve Association and other service groups who advocate phasing out of the sharp drop in SBP payments that occurs at age 62 had pressed for support from Congress arguing three major points:
• SBP participants from the 1970s to early 1980s were not properly briefed on the age-62 reduction when they enrolled. Benefits fall from 55 percent of covered retired pay down to as low as 35 percent.
• All participants are now saddled with a larger share of SBP costs than Congress intended when the program began in 1972.
• Military SBP is inequitable compared to federal civilian survivor benefits, which don’t decline in old age.
Defense officials challenged each of these claims in papers provided to the armed services committee in recent weeks. Dr. David Chu, undersecretary of defense for personnel and readiness, reinforced the department arguments in a letter to committee leaders, sources said.
The DOD effort is aimed at blocking an amendment to the 2005 defense authorization bill (S.2400) from Sen. Mary Landrieu, D-La., that would phase out the age-62 offset by April 2008. The House, in its defense bill, already has approved a nearly identical amendment.
“The underpinnings of that [Landrieu] amendment,” said Defense officials in a point paper, “rest on a number of mistaken assertions.”
Taking aim at the claim that SBP enrollees were not briefed on the benefit drop at 62, Defense officials compiled an inch-thick copy of brochures, handouts and other informational materials dating back to 1972.
“The original DOD Pamphlet used to inform members of this program … clearly laid out the potential impact of the age 62 reduction due to Social Security,” officials said.
But Lange said service associations have heard from hundreds of retirees and survivors who say they weren’t briefed on the offset.
“Either they have all forgotten … or there may be some truth to that,” said Lange. “I don’t think all these people are making that up.”
A Senate source said the DOD arguments are persuasive. SBP, he said, is a “system of contracts” that Landrieu’s amendment proposes to break.
Whether any senator will argue the DOD “facts” in a floor debate, and risk the wrath of tens of thousands of military widows, he could not say.
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