CSB/REDUX Costs and Benefits
CSB/REDUX is the only retirement system that includes a re-adjustment to its retired pay amount. At age 62, retired pay is re-computed to what it would have been under High-3. Also, at age 62, a one-time COLA adjustment is made that applies the cummulative effects of High-3 COLA (CPI) to the new retirement base. Afterwards, future COLAs again are set to CPI minus 1%.
As a result of this feature, SBP operates slightly differently in regard to costs and benefits. All other rules remain the same.
As described under the Base Level section, SBP Premiums and benefits depend on what we call the "base amount" that you elect as the basis of your coverage. Your base amount can be your full monthly retired pay or just a portion, down to as little as $300.
Under CSB/REDUX, full coverage means the full retired pay you would be entitled to under High-3 is your base amount. (This is the amount that would be used as a basis for your age 62 retired pay adjustment).
SBP Costs (Premiums)
The formulas to determine SBP for spouse coverage are described in the Spouse Coverage section. But, keep in mind, that if you elect full coverage, your base amount is higher than what you are actually paid until the age 62 readjustment. Also, remember that the base amount is adjusted annually by CPI minus 1%.
The SBP annuity is determined by the base amount you elect. The base amount may range from a minimum of $300 up to a maximum of full retired pay. The annuity is 55 percent of the base amount. Also, the base amount and the payments to the surviving spouse will generally increase at the same time and by the same percentage that cost-of-living adjustments (COLAs) are made to retired pay. COLA for SBP benefits are set at CPI minus 1%, which is the REDUX retirement pay COLA. Benefits are readjusted at what would have been the member's age 62 to restore the CPI - 1% reduction to full CPI, but CPI - 1% COLAs apply after the member's age 62.
As a result of this modification to the standard premium and benefit calculations, you will pay a higher proportion of your retired pay to obtain coverage. This amount, however, is the same as an individual who opted for High-3 would pay for the same amount of coverage. Your beneficiary will be better protected against inflation than would happen if SBP benefits received the same COLA as REDUX retirements. In effect, you are paying the same price, as a High-3 individual, for the same coverage.
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