House panel sidetracks increased SBP payments in 2003

Since 04-06-03

Shipmates,

For those of you interested  in SBP, here is latest information from Congress:

By Mike Lazorchak
Special to Navy Times
7 April 2003 Issue

House panel sidetracks increased SBP payments

This year, associations and advocacy groups approached Congress with a well-planned and coordinated strategy to end the cut in the Survivors Benefit Program annuities that now occurs at age 62.

They got a sympathetic ear from some lawmakers, with Rep. Jeff Miller, R-Fla., kicking off the effort in early February with HR 548. That bill would increase SBP payments after age 62 from the current 35 percent of a member’s retired pay back to the level of 55 percent that is paid out before a survivor turns 62. The increases would be phased in over the next five years.

Since the bill was introduced, nearly 40 percent of House members have become co-sponsors.

Sens. Olympia Snowe, R-Maine, and John McCain, R-Ariz., brought the Senate aboard in early March with their companion bill, S 451. Almost immediately, 74 senators signed up as co-sponsors.

Rep. Ed Shrock, R-Va., a retired Navy officer and member of the House budget and armed services committees, moved the issue along. He recruited 10 other budget committee members to support an amendment to pay for the increased SBP annuities as part of the House’s 2004 budget resolution, the broad blueprint that guides overall federal spending.

With that much support, it hardly seems possible that the effort could be turned aside. But a devastating setback occurred when House Budget Committee Chairman Rep. Jim Nussle, R-Iowa, announced the committee would not accept the proposed military SBP increase.

Furthermore, Nussle announced that the committee’s budget resolution would require all other oversight committees, except the armed services and homeland defense committees, to reduce federal spending by nearly $470 billion over the next 10 years. That would include $15 billion in veteran’s health and disability programs and nearly $40 billion from federal civilian health, retirement and survivor programs.

Meanwhile, the Senate Budget Committee’s version of the resolution, which did not address the SBP increase or include many of the drastic cuts proposed by the House, must be presented to the entire Senate for debate and approval.

It would be a longshot, but the full Senate could add money for the SBP increase in its budget if an overwhelming number of senators voted to do so.

If the money to pay the SBP annuity increase is not included in the final congressional budget resolution, the House and Senate armed services committees may still put it in the 2004 defense authorization bill. To do so, however, the committees either will have to cut other entitlement programs under their control to pay for it or convince an overwhelming number of representatives and senators to vote to take money from another part of the budget.

When the SBP was created in 1972, Congress expected military retirees to pay 60 percent of the costs and the government 40 percent. Over the past three decades, however, Defense Department data reveal retirees are living considerably longer — and thus paying more premiums than predicted.

For instance, at the end of fiscal 2001, more than 43 percent of military retirees were over 65, compared to about 33 percent a decade earlier. In the same period, the number of retirees age 85 and older more than doubled, from 15,145 to 33,403.

Despite lower SBP premium rates, the greater longevity combined with increased SBP payments caused by annual cost-of-living increases means retirees now pay about 82 percent of total SBP costs, the government about 18 percent.

In contrast, the government pays between 33 percent and 48 percent of federal civilian SBP program costs, and civilian employee survivors get an unreduced annuity of 50 percent to 55 percent of retired pay.

Congress recognized the premium overpayment inequity in 1998 and allows military retirees to stop paying premiums at age 70 or after 30 years, whichever comes later.

Because of congressional entitlement spending rules, however, payments won’t stop until Oct. 1, 2008 — over 10 years after the law was passed. At that time, military retirees, who have been paying premiums since the SBP began in 1972, will have paid premiums for at least 36 years.

Mike Lazorchak is a retired Air Force colonel. E-mail him at retiredmilitary@atpco.com .
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Submitted,
SCPO Don Harribine, USN(Ret)