Propriety of Survivor Benefit Plan Annuity Being Offset To Reflect Social Security Benefit

A disbursing officer of the Army Finance and Accounting Center requested an advance decision as to whether or not the Survivor Benefit Plan (SBP) annuity of a widow of a retired and deceased military member should be offset by Social Security benefits. The widow's mother's benefit and the offset were discontinued when her daughter attained the age of 18. As the surviving spouse of a retired member who died of service-connected causes, she was entitled to Dependency and Indemnity Compensation (DIC) payments as well as Social Security benefits. The SBP provides, however, that a widow or widower who is entitled to both DIC and SBP benefits will receive only the amount by which the SBP benefit exceeds the DIC entitlement as an SBP annuity. The amount deducted from the member's retired pay, which corresponds to the cost of that part of the SBP entitlement not paid because of the DIC payment, will be refunded to the spouse. Since DIC information was not available at the time her SBP annuity was established, the widow was paid both benefits concurrently. Later the annuity was reduced to the amount by which the SBP benefit exceeded the DIC payment, and a retroactive overpayment of annuity was computed. The Veterans Administration is currently remitting payments to liquidate the overpayment. GAO was asked if the widow's annuity should be reduced by her Social Security offset. If so, should the offset be computed using the ratio formula and should a full refund be made? When survivors who are receiving SBP annuities receive Social Security survivors benefits or become entitled to receive such benefits, a reduction of the annuity is required and is calculated on the basis of the Social Security survivorship benefit which would be attributable solely to a retired member's years of military service. The actual Social Security benefit is not affected by this computation. The amount by which a SBP annuity is to be reduced for the Social Security mother's benefit should be the amount to which the widow would be entitled based upon the military service of the deceased member, regardless of whether the widow is actually receiving that amount or some other amount based on her own Social Security employment record. GAO held that the widow's annuity should be reduced by the Social Security offset, but the offset should not be computed using the ratio formula.