1. Command Career
Counselor Regional Training
Survivor Benefit Plan
1

2. Survivor Benefit Plan
Enabling Objectives
Upon successful completion of this topic,
the trainee will be able to:
IDENTIFY the purposes of the Survivor
Benefit Plan (SBP).
IDENTIFY the benefits of the SBP.
IDENTIFY the SBP basic mechanics.
LIST the SBP eligibility requirements.
LIST the categories of SBP coverage.
2

3. Survivor Benefit Plan
Enabling Objectives (cont.)
IDENTIFY the features of each category
of SBP coverage.
IDENTIFY the steps to calculate the SBP
premium.
IDENTIFY the steps to calculate the SBP
annuity.
LIST the online source that estimates the
SBP annuity.
IDENTIFY the Dependency and Indemnity
Compensation (DIC) offset process.
3

4. Survivor Benefit Plan
Enabling Objectives (cont.)
STATE the advantages of COLA
adjustments to the SBP annuity.
STATE the tax implications of the SBP
premiums and annuities.
IDENTIFY the SBP election procedure.
4

5. Survivor Benefit Plan
Reference Publications
OPNAVINST 1750.5, Survivor Benefit Plan
(SBP)
5

6. Survivor Benefit Plan
Purpose of SBP
When a military retiree dies,
retirement pay stops.
The Survivor Benefit Plan (SBP) is a
voluntary program that allows a
military retiree to provide an
annuity of up to 55% of gross
retired pay to eligible designated
beneficiaries.
6

7. Survivor Benefit Plan
Benefits of SBP
SBP is the only means by which a
portion of retired pay can be
continued for eligible survivors.
The premiums are tax-free and the
annuity is COLA-adjusted to protect
future buying power.
Eligibility is not dependent on risk
factors such as age or health.
7

8. Survivor Benefit Plan
Benefits of SBP (cont.)
There are no hidden costs or extra
fees.
The annuity continues for the life of
the beneficiary as long as they
remain eligible.
8

9. Survivor Benefit Plan
Basic Mechanics of SBP
The “base amount,” which is the
dollar amount upon which the
annuity will be based, is elected by
the retiree at retirement.
This amount may range from $300
up to retiree’s full gross retired pay.
The monthly payable annuity and
premiums are
9

10. Survivor Benefit Plan
Service Member Eligibility
Upon retirement
Upon transfer to Fleet Reserve
Sailor placed on Temporary
Disability Retirement List (TDRL) or
Permanent Disability Retirement
List (PDRL)
Death of Sailor on active duty
(NAVADMIN 065/03)
10

11. Survivor Benefit Plan
Categories of Coverage
Spouse Only
Spouse and Child(ren)
Former Spouse
Former Spouse and Child(ren)
Child(ren) Only
Natural Person with Insurable
Interest (NIP)
11

12. Survivor Benefit Plan
Spouse Only Coverage
Must be married at time of retirement.
If married after retirement, must have
been married for one year.
Receives annuity for life or until
remarriage, if prior to age 55.
If remarriage later ends (i.e. death, or
divorce), entitlement may be restored.
Remarriage after 55 does not terminate
entitlement.
12

13. Survivor Benefit Plan
Former Spouse Coverage
Retiree’s may voluntarily elect SBP
coverage for former spouses.
State courts are permitted to order
Sailors to provide former spouse
coverage for court orders issued on
or after 14 November 1986.
Former spouses are also ineligible
if they remarry prior to age 55.
13

14. Survivor Benefit Plan
Children Only Coverage
Annuity goes to eligible child(ren) if
elected. If married, spouse
concurrence with the “child(ren) only”
election is required.
Child(ren) remain eligible until age 18,
or 22 if full-time unmarried students.
Child(ren) incapable of support are
eligible as long as incapacitation
exists or until marriage.
14

15. Survivor Benefit Plan
Children Only Coverage (cont.)
Annuities are 55% of retiree’s “base
amount” as long as eligible:
Is not reduced because of concurrent
government benefits.
Is equally divided among eligible
children.
Is paid to parent or guardian until age
18 or age of maturity.
15

16. Survivor Benefit Plan
Spouse/Former Spouse and Children
Coverage
Eligibility requirements are the
same as spouse/former spouse.
Children coverage same as
child(ren) only coverage with one
exception:
Only children acquired during
marriage to former spouse can be
covered. Children cannot be added
after the divorce.
16

17. Survivor Benefit Plan
Spouse/Former Spouse and Children
Coverage (cont.)
SBP premiums calculated by
adding the spouse/former spouse
premium and a small charge based
on the age of Sailor, spouse, and
youngest child.
Children only receive benefit if
spouse loses eligibility or dies.
17

18. Survivor Benefit Plan
Natural Person with Insurable Interest
(NIP)
Allows retirees without a spouse or
dependent child(ren) to elect
coverage for a person who has a
bona fide financial interest:
Need not be a dependent.
May be a close relative, a child, or a
close business associate.
18

19. Survivor Benefit Plan
Premium Calculation
Automatically deducted from retirement pay
Basic formula BA x .065 = Premium
Sailors who entered active duty on or after 1
March 1990: The premium is 6.5% of the
elected base amount.
Sailors who entered active duty before 1
March 1990: The premium is either:
6.5% of the elected base amount OR
2.5% of the first $725 of the base amount,
plus 10% of the remaining base amount, if
the base amount is less than $1,554.
19

20. Survivor Benefit Plan
Insurable Interest Premiums
Premiums are 10% of the retiree’s
gross retired pay, plus an additional
5% for each five full years the
annuitant is younger than the
retiree.
Premium costs cannot exceed 40%
of the Sailor’s gross retired pay.
20

21. Survivor Benefit Plan
Cost of Living (COLA) Adjustments
SBP annuities and premiums are
adjusted at the same time and the
same percentage as retired pay.
This benefit protects the
purchasing power of the
survivor’s annuity.
21

22. Survivor Benefit Plan
Tax Implications
SBP premiums are not taxable
income. This factor makes the
actual cost for SBP even less
expensive.
The SBP annuity is taxable income
for federal tax purposes, though
some states exempt SBP annuities
in whole or in part.
22

23. SBP’s Real Cost
NO SBP* SBP
Retired Pay $2,000 $2,000
SBP Cost $ 0 $ 130
Taxable Pay $2,000 $1,870
Tax Paid (28%) $ 560 $ 524
Annuity $ 0 $1,100
* This non-participant actually “pays” $36/mo in
the form of unrealized tax savings—survivor
gets $0.
23

24. Survivor Benefit Plan
SBP Elections
Use DD Form 2656.
Spousal concurrence required if
election is anything less than full base
amount.
Witnessed by notary public.
Completed NLT 45 days prior to date
eligible to receive retainer/retirement
pay.
If no election made, automatically
enrolled at full coverage.
24

25.  A ““JJOOIINNTT”” Decision For
Married Sailors Who . . . .
 Decline coverage
 Cover less than full retired pay
 Elect “child only”
 It is the Sailor’s election:
 The spouse can only concur or
not concur.
25

26. Survivor Benefit Plan
SBP Recent Changes
DFAS Release 0308-002:
Retirees who are at least 70 years old
and have paid at least 360 months of
premiums on 1 October 2008, will
have their monthly payments
terminated.
If a retiree does not meet both of the
above criteria, the premiums will stop
when the retiree has met both criteria:
Reaches age 70.
Pays SBP premiums for 360 months.
26

27. Remember :
THE BOTTOM LINE
RETIRED PAY
STOPS
WHEN THE RETIREE DIES!
27