Report: U.S. Survivor Benefits Compare Well to Other Sectors

New studies released by RAND, an independent research and development group, found that the policies of the Survivor Benefit Plan (SBP) “generally compared well” to those of other public, private, federal and commercial plans.

The assessment began at the request of Congress to compare the financial outreach to surviving members from different sectors.

The chief purpose of SBP is to provide a “reasonable level of income through an annuity” to survivors of U.S. service members who die in the line of duty or are enrolled in SBP as retirees.

This benefits program replaced a former federal plan that resulted in high costs for retirees and other “limitations.”

According to the assessment, most annuitants were survivors of military retirees in 2016. RAND said the amount covered by SBP has been rising, reaching about 98 percent of the retiree group.

Part of the increase comes from the Department of Defense’s subsidization of SBP, which calls for lower paid premiums of retirees “that would be required to cover the full liability of SBP,” according to RAND.

RAND said SBP benefits typically provide up to a third, and sometimes up to half, of survivors’ income, depending on whether they receive Social Security.

In those sectors, RAND said that retirement plans are often available in defined programs. These plans cause workers to depend on life insurance, defined contribution plans, workers’ compensation and Social Security to provide for surviving family.

SBP benefits for the total income of a service member’s widow also received positive feedback from the research group.

“As with other widows who receive survivor benefits, these benefits are a key contributor to their financial status, contributing about half of total income, on average, for younger military widows who do not receive Social Security and about a third of total income for those who do,” the report said.

The assessment also examined the plausibility of using commercial sources to provide survivor benefits. RAND says this possibility assumes that the DoD will continue to subsidize SBP, and: “[Its] advisability depends on whether the commercial cost of administering SBP and managing the SBP fund, plus DoD’s cost of contracting, would be less than in-house costs of administration and managing SBP and on what quality of service would be preferred.”

Other SBP benefits include the DoD death gratuity, life insurance, education assistance, child care, and tax forgiveness.

Click here to read the full assessment published by RAND.

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