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16 April 2004 The Honorable John McHugh, M. C, Dear Mr. Chairman: In chairing a March 24, 2004, hearing of your distinguished subcommittee, you mentioned that eliminating the reduction in the Uniformed Services Survivor Benefit Plan (SBP) annuity at age 62 would increase the government’s share to 53 percent. In other words, the government that has been negligent in meeting its share of 40 percent for years, currently contributing less than one-half of the required percentage, might have to pay as much as 53 percent of the costs of the Plan. The Fleet Reserve Association (FRA) has no quarrel with the 53 percent figure; however, the huge jump from 18-19 percent to 53 percent cannot be attributed alone to the Government’s share of its costs in supporting SBP annuities for survivors of retired military personnel. The intent of the original proposal, H.R. 15152, 90th Congress, entitled "Widow’s Equity," authored by the Fleet Reserve Association and introduced by former Representative Charles S. Gubser of California, was to provide an improved survivor benefit for the widows of retired military personnel. Gubser reintroduced his bill as H.R. 6226 in the 91st Congress and it was the point of discussion in hearings conducted in July 1970 by the House Armed Services Committee’s Special Subcommittee on Survivor Benefits. In opening the hearing, the then Chairman of the Subcommittee noted that there is a "full program in being for the survivors of those who die on active duty," but "the lack of assurance of survivor benefits (for widows of military retirees) is one of the few remaining gaps in the outstanding program of benefits for military personnel." The Chairman’s sentiments were echoed later by the then-Deputy Secretary of Defense for Military Personnel Policy. Appearing before the subcommittee he said, "A serious deficiency in the present (survivor benefit) program lies in our (current) plan for protection of retirees’ families." The Dept. of Defense Military Compensation Background Papers, Fifth Edition, September 1996, pages 685-686, subsequently reaffirmed the intent of the early hearing: "The purpose of changing the survivor benefit program from a self-supporting to a cost sharing plan was described by a Congressional subcommittee in these terms: ‘The lack of basic survivor protection, which is a standard feature of most employee fringe benefit programs, public and private, and which is of particular importance to the military man because of his long period of retirement, it is a glaring weakness in the singularly outstanding benefits program based solely on the man’s retired pay at a cost comparable to other systems, such as the civil service system, call into question the retiree’s inherent legal interest in his retired pay. The subcommittee believes the concept of retired pay as an earned right in which the retiree has a legal interest should go beyond challenge. … The subcommittee believes Congress, in recognition of these rights, has a moral obligation to join in providing income protection for his survivors." (Italics supplied.) FRA is strongly resolute in its belief that the USSBP was enacted to provide a survivor benefit plan for the surviving spouses of retired members of the uniformed services. The cost sharing plan of 60-40 was relevant only to that group with few if any others considered for participating in the program. Subsequent to the Plan’s adoption in 1972, Congress added one new group after another to be eligible to receive the annuity without cost as required of the participating military retiree. • 1978: Added non-regular members eligible for retired pay who die prior to their 60th birth date. • 1972: Added certain widows whose retired military spouses died prior to September 21, 1973. • 1987: Added surviving dependent children of active duty, retirement eligible members, who die on active duty without surviving spouses. • 2001: Added surviving spouses of members who die on active duty who were not yet eligible for retirement. FRA fully supports the addition of the above groups of active duty and reserve personnel, their surviving families, and pre-1973 widows, but cannot in good conscience allow the burden of the cost of their participation to be placed on the shoulders of the retired military community without objecting to the government’s negligence in meeting its share of the costs. There is no doubt the government’s share will rise if the annuity reduction at age 62 is eliminated but much of the increase may be attributed to the addition of more and more non-contributory beneficiaries. Congress should direct the government to reimburse the plan for the money it has failed to fully contribute over the years. FRA believes there is a way to correct the situation; authorize two plans, one for military retirees and another for those who are non-contributors. The government would continue to share the costs of the retirees’ program on a 60-40 basis while accepting the full responsibility of funding the plan for all others. By doing so, the proposal to eliminate the reduction of the surviving annuity at age 62 from 55 to 35 percent of the retiree’s covered amount can be adopted by Congress with the costs shared by the retirees and the government nearer to the original 60-40 split. If the cost-share for the retirees’ plan increases for the government, so be it. The government then would be repaying our military retirees for the overcharges forced upon them over their years of participation in SBP.
JLB:aal cc: Rep. Vic Snyder, Ranking Member, Total Force Subcmte |