Federal employees who have prior military service have a decision to make when it comes to retirement – either make a military service deposit to boost their FERS annuity (and forgo their military retirement benefit) or utilize the blended retirement system by receiving two separate pensions – one military and the other FERS (or possibly CSRS – the Civil Service Retirement System).
This article aims to clarify the differences between the Military Survivor Benefits Plan (SBP) and the Federal Employees Retirement System (FERS) survivor’s annuity, providing insights for military retirees and federal employees. While it usually makes sense to make the deposit for military time, one key factor determining whether this is a good idea or not depends on survivorship.
Overview of Survivor Benefits for Civilian and Military Pension Plans
A survivor benefit is a financial safety net designed to provide a monthly annuity benefit or a lump sum benefit to eligible survivors upon the death of a retiree. The primary goal of a survivor benefit plan is to financially support the surviving spouse and, in some cases, dependent children or other beneficiaries, offering a percentage of retired pay to maintain their standard of living after the retiree’s passing.
Importance of Understanding Survivor Benefits
Understanding survivor benefits is paramount for military and civilian retirees because the decisions made during retirement planning directly impact the financial security of their loved ones. It’s important to weigh the cost of SBP premiums against the potential benefits for survivors, especially when considering scenarios like the military SBP cost stopping at age 70 after 30 years of payments. Comparing the features of the SBP and FERS survivor’s annuity allows for a comprehensive assessment of which retirement system best meets the retiree’s, and their family’s, needs.
Eligibility for Military Survivor Benefits Plan
Eligibility for military survivor benefits, particularly under the Survivor Benefit Plan (SBP benefits), hinges on several factors. Specifically, some examples of eligible survivors include:
- The surviving spouse of a military retiree, if married at the time of retirement.
- Dependent children.
- In some cases, a former spouse who has been designated as the SBP beneficiary. (If you want a new spouse to receive benefits, keeping beneficiary forms current is necessary.)
Military Survivor Benefit Plan (SBP) Explained
The Military SPB is a program designed to provide a continuing monthly annuity benefit to eligible survivors of military retirees, not those who passed in the line of duty. It ensures that upon the death of a retiree, the surviving spouse or designated beneficiary receives a percentage of the military retired pay.
Cost Factors and Payment Structure
SBP coverage is a key consideration for military retirees. SBP premiums are deducted from military retired pay each month. The cost is calculated as a percentage of the base amount of coverage which the retiree selects. One notable aspect of the military SBP is that the cost ceases once the military retiree reaches age 70 and has paid premiums for 30 years, making it a paid-up benefit, unlike the FERS survivorship.
FERS Survivor’s Annuity: Eligibility, Options, and Benefits
A key component of the FERS pension is the survivor annuity for a spouse, designed to protect an eligible spouse upon the death of a federal retiree. The choice to provide a survivor annuity is a significant one when applying to OPM retirement services as it is irrevocable.
| FERS Survivor’s Options | Cost | Benefit Amount for Widow or Widower |
| Full Survivor Benefit Payable | 10% of FERS pension (taken out of monthly benefit) | 50% of retiree’s pension |
| Half Benefit, Spouse Coverage | 5% of FERS retirement pay | 25% of FERS annuity |
| No Survivor Annuity | none | 0% – spouse will not be eligible for other benefits such as FEHB |
Eligibility Criteria for FERS Survivor’s Annuity
Eligibility for the FERS survivor’s annuity hinges on specific criteria. Typically, the surviving spouse is eligible if married to the deceased at the time of death. If a federal employee dies while still employed, the surviving spouse will likely be eligible for a basic employee death benefit, which is a lump sum payment.
If under age 60 while meeting eligibility for survivor benefits, you might also be eligible for benefits such as the FERS Special Supplement for Survivors, which provides a monthly survivor benefit. These benefits are payable until you’re eligible to start receiving survivor benefits from Social Security.
Comparative Analysis: Military SBP vs. FERS Annuity
Both the SBP annuity and FERS survivor’s pensions receive cost of living adjustments so that’s a non-factor. There is one key advantage of the military compensation for a spouse to receive SBP benefits which is that the premiums cease at age 70 after 30 years of payments, offering a finite cost. Because there is this maximum SBP cost, civilian feds with prior military service might want to consider not making a deposit for this service toward their FERS pension. There will still need to be a choice regarding the FERS survivor benefit component, but it might not be as consequential knowing the military retired pay comes with SBP options. If you are eligible for a military member’s retired pay and the FERS annuity program, consulting with a federal retirement benefits expert you can trust is practically a necessity.
