Retired Pay Newsletter
November 10, 2005

THIS BULLETIN UPDATE CONTAINS THE FOLLOWING ARTICLES:

myPay: The Key to Controlling Your Pay 
Retirees and annuitants can receive the new Retired and Annuitant Pay Newsletter via e-mail by signing up at DFAS' myPay Web site. Only those with myPay accounts and valid e-mail addresses will receive invitations to subscribe. Each newsletter will contain articles on new entitlements, changes to retiree pay and the latest legislative initiatives.

Retirees and annuitants that haven't signed up for the newsletter can visit myPay at https://mypay.dfas.mil . Once they have a myPay account and included a valid e-mail address, retirees and annuitants can sign up for electronic delivery of the newsletter by clicking on the link included on the myPay login screen or by accessing http://image.exacttarget.com/members/9232/Retired%20Pay%20Sign%20Up.htm .

New myPay users will soon discover the ease and convenience of monitoring their pay accounts online, as well as changing tax withholding information, starting or stopping allotments and updating bank information for direct deposit of their monthly pay. Of course, myPay users can also access their IRS 1099-R forms online weeks before receiving them in the mail, giving them a jump on completing their IRS tax forms (and getting their refunds quicker).

Security is always a concern in today's society and myPay is no exception. Current and future myPay account holders can rest assured that DFAS is committed to providing access to information and management using the latest in online security. myPay has always met or exceeded industry-standard security measures to protect user's privacy. That's why 3,422,536 DFAS customers, from active duty military to National Guard, retirees and annuitants are current myPay users. Each knows the peace of mind that myPay offers when managing their pay accounts with the best security available. In fact, identity theft protection is greater for myPay users than for those who rely on “snail mail” to transact their financial business.

The latest security enhancement available to myPay users is the ability to change their login identification (ID) along with their personal identification number (PIN). This allows users accessing the system to use their own unique (and easily remembered) login information without relying on their Social Security number to enter myPay . Users can make these changes by logging into myPay and clicking on Personal Settings Page. Links for changing PINs and LOGIN ID are provided.

While the myPay planners and programmers work on a number of future enhancements, they are also putting the finishing touches on a new feature that will be unveiled next year. Once launched, this new feature will provide retiree and annuitant users to receive e-mail confirmation of the changes they make to their pay accounts when using myPay .

Future issues of the Retired and Annuitant Pay Newsletter will feature more articles on how retirees, annuitants and their representatives can use myPay to make their lives easier, simpler and more secure.

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Account and Tax forms slated for December distribution

DFAS Retired and Annuitant Pay announced that Retiree and Annuitant Account Statements (RAS) and 1099-R Tax Forms will be mailed throughout the latter half of December.

The account statements and 1099-R Tax Forms for retiree and annuitant pay will be combined and mailed together. While the exact mailing schedule is unknown, DFAS will provide completed statements and forms to the printing and mailing contractor by December 14, 2005, for incremental mailings scheduled to occur throughout the last half of December.

For retirees, the RAS will reflect changes due to the cost-of-living increase, the Veterans Administration (VA) Legislative increase and changes to the Federal Income Tax Withholding rates.

Due to the VA Legislative increase, recipients of Combat Related Special Compensation (CRSC) will also receive an increase to their CRSC amount. This amount will affect the December 2005 entitlement scheduled for the payment on January 3, 2006 and will be reflected on the CRSC pay statement available to retirees on myPay . Retirees that do not have a myPay account will not receive a CRSC pay statement.

Retirees entitled to receive either CRSC or Concurrent Retirement and Disability Pay (CRDP) will be provided with an election form as part of the annual open season. During the open season, affected retirees will have the opportunity to elect to receive either CRDP or CRSC for the next year. In order for the entitlement to change, the form must be received and processed by January 31, 2006. Based on the election, the change will take effect on the payment dated February 1, 2006.

In addition, as a result of the phased in CRDP, the amount retirees will receive for CRDP will increase effective January 2006 and will be reflected in the payment dated February 1, 2006.

The Annuitant Account Statement will reflect changes due to the cost-of-living increase, changes to the VA Dependency and Indemnity Compensation (DIC) amounts and changes to Federal Income Tax Withholding rates.

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Social Security Offset

Effective October 1, 2005, DFAS will begin implementing the congressionally-mandated Social Security Offset Legislation. The phase-out means thousands of survivors will get more money from their Survivor Benefit Plan (SBP) annuities.

Over the next three years, the minimum percent used to calculate a SBP annuity will incrementally increase. The first incremental change will occur on October 1, 2005, when any annuitant currently receiving SBP at less than 40 percent of the base annuity will have his or her annuity increased to 40 percent. This re-computation will be reflected in the annuitant's October account statement and November 1, 2005 payment. The benefit will remain unchanged for annuitants currently receiving payments greater than 40 percent of the annuity base.

DFAS will continue to implement the phase-out of the Social Security Offset over the next three years effective as follows:

· April 1, 2006, the minimum annuity percentage will increase to 45 percent.

· April 1, 2007, the minimum annuity percentage will increase to 50 percent.

· April 1, 2008, the minimum annuity percentage will increase to 55 percent.

Beginning April 1, 2008, there will no longer be a Social Security Offset and annuitants will receive the maximum 55 percent of the annuity base.

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SBP Open Season
The Department of Defense ( DoD ) has announced a new one-year open enrollment period for military retirees wishing to participate in the Survivor Benefit Plan (SBP). Open enrollment began October 1, 2005 and will continue until September 30, 2006.

Open enrollment allows non-participating military retirees a chance to enroll in the SBP for the first time or, for retirees who are participating at less than the maximum coverage, to increase coverage for their spouses under the new plan.

To qualify for participation in the SBP Open Season, a military retiree must be:

• Currently receiving retired pay and have previously declined coverage for an eligible beneficiary, or
• Currently participating in SBP under a reduced base amount, or
• Currently a reservist who is eligible to receive retired pay at age 60 after having declined to participate in the Reserve Component Survivor Benefit Plan, elected deferred coverage, or elected to receive immediate coverage at less than maximum coverage.

Retirees who choose to enroll during the open season must pay all applicable back premiums plus interest either in a lump sum or in 24 equal installments. To remain eligible, retirees must also pay monthly premiums for at least two years and declare that the total benefit will be paid to a named beneficiary. If a retiree should die during this 24-month period, all premiums paid to date would be refunded to the beneficiary named on the retiree's election form.

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