Managing Your Retirement Pay: Educate Your Beneficiaries

Sometimes the most difficult conversations to have are the most important, like helping your loved ones be prepared for when you die. Talking to your family about this topic beforehand is a way to show that you care, and it will help to ease the financial burdens they may face.

Military retirees can have beneficiaries for their arrears of pay (AOP), and if they have elected coverage under the Survivor Benefit Plan, they will have an SBP beneficiary as well. This article is intended to help you prepare your AOP beneficiary to file a claim when the time comes.

First, make sure you understand what an Arrears of Pay beneficiary is and the nature of the benefit to which they are entitled. Find more information on this benefit here.

Second, tell your beneficiaries who they are.  Hopefully, you've designated your beneficiaries for any arrears of pay that may be due. When no beneficiary is named, the payment is made to the highest person in what is known as the "Order of Precedence." The Order or Precedence is the federally mandated order of inheritance that applies to legacies without a designated beneficiary.

Find more information on "Order of Precedence" here.

Please keep in mind that it can take many months to locate your survivors, identify who comes highest in the Order of Precedence and then make the payment. That's why having a current, correct, and complete beneficiary designation on file is important to prevent delays or errors in your arrears payments.

Designating a sole beneficiary in your will does not automatically make that person your AOP beneficiary. AOP determination is based exclusively on the AOP beneficiary election in your retired pay account. To review your current arrears of pay beneficiaries and to make changes, visit the Beneficiaries for Arrears link once you've signed in to your myPay account.

For more detailed instructions on designating an Arrears of Pay beneficiary on myPay, you can review the article on our website .

Third, let your beneficiary know that sometimes money that has already been deposited into your checking account needs to be returned to us. Military retired pay is only payable for as long as you are alive. Entitlement to your military retirement ends when you die. Most banks will automatically deduct any overpaid funds without warning, which can be troublesome, especially if you share a joint account.

Fourth, tell your beneficiaries what documents they will need to send in to make their claim. One copy of the death certificate that includes the manner of death needs to be sent to us. Also, each beneficiary should complete a Claim for Unpaid Compensation (SF 1174). It's a great idea to go over this claim form with them to make sure they will have all of the information they need to fill it out. If you want a more detailed explanation of this process, check out the instructions on our website

Fifth, let your beneficiaries know that sometimes there is no money due. Each situation is different. It just depends how up to date the account was kept. You can make sure your account is in good standing by performing a yearly audit.

Sixth, when an arrears payment is made, there is a statement on the check that reads, "Retired Pay Payable only during life of Payee." Please do not let this statement alarm your beneficiaries. As long as the beneficiary's name is accurate on the check, the check can be cashed.

We want to take the best care of your loved ones when you die, you can help us by having a conversation with them to prepare them so they can know what to expect. We know talking about it might be difficult, but hopefully this checklist gives you an idea of the things to say. Don't put it off. Have a conversation about it with your loved ones today.