In the National Defense Authorization Act for Fiscal Year 2024, Congress asked the U.S. Department of Defense to evaluate the effect of repealing the optional Survivor Benefit Plan (SBP) child annuity and recommend actions to mitigate any negative effects of the repeal. The authors discuss the history of SBP, the unintentional consequences of recent reforms, and other federal survivor benefit programs, and they conclude with recommendations.

The Survivor Benefit Plan Optional Child Annuity Repeal

Impacts and Adverse Effects

Devon Hill, Samantha Cherney, Daniel B. Ginsberg

ResearchPublished Apr 28, 2026

The Survivor Benefit Plan (SBP) is a U.S. Department of Defense (DoD)–sponsored and –subsidized program available to military retirees that allows them to ensure a continuous lifetime annuity to their spouses or dependents upon their death. The plan is administered by the Defense Finance Accounting Service (DFAS), and, as of September 2022, approximately 1.38 million military retirees were enrolled in SBP with 294,786 recipients. Of those recipients, 8,360 were because of deaths on active duty.

Prior to recent reforms, when a surviving spouse was entitled to both SBP and Dependency and Indemnity Compensation (DIC), which is administered by the U.S. Department of Veterans Affairs (VA), the SBP benefit was reduced by the amount of the DIC benefit. This was commonly known as the SBP-DIC offset. In 2002, Congress established an optional child annuity that allowed dependent children to be provided SBP benefits without any DIC offset. This optional annuity was repealed alongside the termination of the SBP-DIC offset.

In the National Defense Authorization Act for Fiscal Year 2024, Congress asked DoD to evaluate the effect of repealing the optional SBP child annuity and recommend legislative actions to ensure the necessary flexibility to allow payments to dependent children. In this report, the authors review the history of SBP and the unintentional consequences of recent reforms, discuss other federal survivor benefit programs, and conclude with recommendations for DoD.

Key Findings

  • Originally enacted in 1972, SBP has been modified repeatedly, which has affected who is eligible for this plan, the size of the cash benefit, and interactions with other federal benefit programs.
  • When SBP was first enacted, Congress intended that it provide full survivor coverage in cases in which there were no other payable benefits and supplemental coverage when other benefits were insufficient to provide a reasonable level of support.
  • Congress established an optional child annuity that allowed service members to designate the payment of SBP to dependent children when there was a surviving spouse; the optional child annuity was not subject to an offset with VA's DIC.
  • The 2020 repeal of the SBP-DIC offset and the elimination of the optional child annuity created uncertainty regarding the potential inequities that face child beneficiaries.
  • As of spring 2025, between 6,000 and 7,000 cases have been turned over from a dependent to spousal annuitant; approximately 1,000 SBP accounts were not paid out to anyone because the eligibility of a surviving spouse could not be verified.
  • The authors' review did not find any concrete examples of previous child beneficiaries who suffered any financial hardship because of the repeal of the optional child annuity.
  • DFAS does not provide readily available guidance on what documents may be used by surviving dependents who had received SBP payments to prove spousal ineligibility.
  • As of spring 2025, any problems created by the repeal of the child annuity are relatively small in scale.

Recommendations

  • DFAS could presumptively accept any marriage certificate as verification of a spouse's ineligibility. This applies to the scenario in which a spouse has not responded to DFAS outreach and the verification provided by the child or their guardian is outdated. Rather than rejecting an outdated marriage certificate as verification of a spouse's ineligibility, DFAS could presumptively accept it and pay the child.
  • A time limit for the spouse to respond to the outreach should be set. If the time limit expires without a response, DFAS would revert to paying any eligible surviving dependents. If the spouse eventually responds to the outreach and is eligible, payment to the spouse would commence, and payment to dependents would cease.
  • Congress could repeal the elimination of the optional child annuity, thus putting the child annuity back in place. Experts interviewed for this study said that reestablishing the child annuity would be administratively burdensome and pose tremendous complexities for service members as they decide what makes the most sense for their families.
  • More-limited changes could be implemented with relatively low levels of effort. DFAS could consider reviewing its discretion to establish guidelines for a time limit for spousal response and clarify verification requirements.
  • DFAS could update the DFAS website and other relevant DoD websites to provide SBP guidance and answer frequently asked questions, clarify rules, and provide additional contact information.
  • DFAS should collect and track data on cases in which no one is receiving payments.

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Hill, Devon, Samantha Cherney, and Daniel B. Ginsberg, The Survivor Benefit Plan Optional Child Annuity Repeal: Impacts and Adverse Effects. Santa Monica, CA: RAND Corporation, 2026. https://www.rand.org/pubs/research_reports/RRA3275-1.html.
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This research was sponsored by the Assistant Secretary of Defense for Manpower and Reserve Affairs within the Office of the Under Secretary of Defense for Personnel and Readiness and conducted within the Personnel, Readiness, and Health Program of the RAND National Security Research Division (NSRD).

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