Defense officials, in a late-hour attempt to persuade senators not to join the House of Representatives 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 Survivor Benefit Plan 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 the 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.
The officers association, the Fleet Reserve Association and other service groups that advocate phasing out the sharp drop in survivor payments that occurs at age 62 had pressed for support from Congress, arguing three main points:
* Survivor Benefit Plan 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 to as low as 35 percent.
* All participants are now saddled with a larger share of Survivor Benefit Plan costs than Congress intended when the program began in 1972.
* The military Survivor Benefit Plan is inequitable compared with 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. David Chu, under secretary of defense for personnel and readiness, reinforced the department arguments in a letter to committee leaders, sources said.
The Defense Department effort is aimed at blocking an amendment to the 2005 defense authorization bill 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,” Defense Department officials wrote, “rest on a number of mistaken assertions.”
Taking aim at the claim that Survivor Benefit Plan 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.
To the charge that the government subsidized 40 percent of Survivor Benefit Plan costs when the program began, and should again, Defense Department officials said the size of the subsidy has no effect on “promised benefits or prescribed premiums.”
It is true that, with retirees living longer, the subsidy has fallen below 20 percent for regular retirees, the officials said. For other groups, though, including disabled retirees, active duty deceased and reservists who retire at 60, the subsidy is “well above” 40 percent. Because the Landrieu amendment would raise benefits sharply for almost all groups of beneficiaries over 62, a “more focused response” is needed, officials said.
Regarding the claim that the military Survivor Benefit Plan is unfair compared with federal civilian plans, defense officials said comparisons are inappropriate given the differences in the retirement plans. Civilians under the Civil Service Retirement System see no drop in survivor benefits at 62 because they don’t draw Social Security. Retirees under the Federal Employees Retirement System contribute to their retirement plan, officials said. Military retirees don’t.
There’s no reason to compare retirement plans, Lange said.
“We’re simply talking about one survivor benefit plan against another, both paid for by members, and the benefit is dramatically different.”
Most of that difference, Lange said, is that federal civilians see no dip in benefits while approaching old age.
Taking a cue from last year’s success in easing the ban on concurrent receipt of full military retirement and disability pay, when bill sponsors dubbed it the “veterans disability tax,” proponents of the Survivor Benefit Plan gains this year began calling the benefit drop at 62 the “military widow’s tax.”
Defense officials suggest that is misleading as well. They made charts showing that for the widow of a typical enlisted retiree (E-7) or officer (O-5) with 20 years of service, total federal income at 62 would rise by almost $690 a month by combining Social Security with a lowered survivor benefit.
A Senate source said the Defense Department arguments are persuasive. The Survivor Benefit Plan, he said, is a “system of contracts” that Landrieu’s amendment proposes to break.
Whether any senator will argue the Defense Department “facts” in a floor debate, and risk the wrath of tens of thousands of military widows, he could not say.
Comments are welcomed. Write to Military Update, P.O. Box 23111, Centreville, VA 20190-1111, e-mail milupdate@aol.com or go to www.militaryupdate.com.
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