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Veterans Survivor Benefit Program (SBP)

Survivors can receive an annuity after a veteran dies, under the Survivor Benefit Program (SBP). When a veteran dies, his retirement pay stops. However, if the veteran enrolled in the Survivor Benefit Program, a surviving spouse or minor children can continue to receive a portion of that pay.

The Department of Defense (DOD), not the VA, manages the Survivor Benefit Program (SBP). At the time of retirement, veterans can enroll in the Survivor Benefit Program. Under this program, a retiree forfeits 6.5 percent of “covered” retirement pay each month in premiums. In return, when the retiree dies, the surviving spouse or minor children get an annuity equal to 55 percent of the covered retirement pay.

You can elect to have any portion, up to 100 percent of your military retired pay, covered under SBP.

Assume your military retirement pay is $2,000 per month. If you want, you can cover 100 percent of that, meaning you would have 6.5 percent of the entire $2,000 ($130) deducted from your retirement pay each month, and your spouse or children would receive 55 percent of the $2,000 ($1,100) per month upon your death.

On the other hand, you could elect to cover only 50 percent of your retired pay under SBP. In that case, your retired pay would be reduced by 6.5 percent of that $1,000 amount ($65), but your family would only receive 55 percent of $1,000, or $550 per month, upon your demise.

At the time you out-process from the military for retirement, you must sign a form either accepting or declining the SBP option (your friendly neighborhood military personnel clerk will make sure you do so).

If you are married and you decline SBP, your spouse must also sign, agreeing to the declination. Otherwise, you’ll be automatically enrolled in the SBP.

If your spouse remarries before age 55, SBP payments stop. However, if the remarriage ends, SBP payments can be reestablished.

Under the law, SBP payments are reduced by any amount of Dependency and Indemnity Compensation received. Many members of Congress want to eliminate this offset. However, even Congress critters don’t always get everything they want.

Some members tried to eliminate the offset in 2007 but accepted a compromise instead. As part of the 2008 Defense Authorization Act, a new payment called “Special Survivor Indemnity Allowance” was created.

The VA pays $50 a month to a surviving spouse who is eligible for both DIC and SBP. The $50 allowance is set to increase by $10 a year on October 1 each year through 2012 — and then cease on February 28, 2016, unless Congress takes action to make the allowance permanent or to eliminate the offset altogether.

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