Financial Management: Implications of Significant Recent and Potential Changes for the Actuarial Soundness of the Department of Defense Survivor Benefit Plan Program

GAO-06-837R Published: Jul 26, 2006. Publicly Released: Jul 26, 2006.
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This report responds to a legislative mandate to report on the effects of certain program changes on the actuarial soundness of the Survivor Benefit Plan (SBP) program, which is part of the Department of Defense's (DOD) Military Retirement Fund (Fund). The primary purpose of the SBP is to provide benefits to the surviving dependents of deceased members or retirees of the armed forces. In certain cases, individuals other than dependents can be designated recipients of survivor benefits. The Fund accumulates financing resources in order to fund, on an actuarially sound basis, the liabilities of the military retirement and SBP programs. The SBP was created by legislation enacted on September 21, 1972, and has been modified various times by subsequent legislation. The fiscal year 2006 National Defense Authorization Act requires that we report to Congress on (1) the effect of recent significant SBP program changes on the actuarial soundness of the program, (2) the effect of these significant SBP program changes by the various categories of participants and in total on (a) DOD normal cost payments for the program and (b) Department of the Treasury (Treasury) payments to amortize the unfunded liability amounts, (3) the potential effects to Treasury and DOD payments that would result from the following two legislative changes: (a) the enactment of a law permitting participants in the program to designate an insurable interest if a previously designated beneficiary dies and (b) the enactment of a law repealing the Dependency and Indemnity Compensation (DIC) offset (10 U.S.C. 1450(c), 1451(c)(2)) for beneficiaries, and (4) the effect that each of the two potential legislative changes would have on the actuarial soundness of the SBP.

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