the earnings of the deceased while he was still living, running 150 to 200 percent of gross pay. In other instances the total amount is less than any reasonable minimum standard.

Another fault of the present system is that it does not furnish the serviceman with a unified and understandable program of survivor benefits. The combined effect of all of the parts is little known and poorly understood in many cases. Thus the serviceman is deprived of the sense of reassurance which would stem from a simpler system.

Recommendation No. 19

A more compact and simple system of survivor benefits for military personnel and veterans is essential. One that is better adapted to individual needs would be an advantage to the serviceman and the Government.

The Need for Survivor Benefits

The payment of cash benefits from the Public Treasury to survivors of persons who die as a result of military service is a community sharing of the risk in a public enterprise. It is based on the belief that the burdens should not fall entirely on a few, but should be shared by all of the society. Also, the provision of survivor benefits tends to remove one of the possible deterrents to enlistments.

In civilian life the most widely known form of survivor benefits is life insurance. This is most often paid in a lump sum at the time of death. Another form is the survivor benefits under the Social Security Act which consist of a small lump sum and of monthly payments under certain conditions.

The average person tends to underestimate the cost and value of a series of monthly payments. The $10,000 of Government life insurance in the First World War represented an impressive sum to most servicemen and their families, whereas the monthly amounts of $57.50 in which it was paid were not nearly so impressive; yet the one is mathematically equivalent to the other. To most people, a series of monthly payments is less of an incentive and provides less in the way of reassurance than the

corresponding lump sum. Nevertheless, lump sums tend not to last very long, particularly when paid to beneficiaries with little experience in fiancial matters. Monthly payments are undoubtedly of greater benefit to the average recipient.

Historically, benefits for survivors have been in the form of monthly or other periodic payments. This form probably originated in the early practice of providing commodities to the survivors as they were needed, rather than cash payment. However, there is a need for a small lump-sum payment at death, to pay outstanding obligations, to help in resettling the family when this is necessary, and to tide the family over until the monthly payments start.

Recommendation No. 20

A small lump-sum payment at the time of death, with monthly payments thereafter, is the best combination of benefits for survivors. In keeping with the idea that survivor payments represent a community sharing of the risk in a public enterprise, the monthly payments should be limited to those who were dependent upon the deceased, or who would have been dependent if he had lived.

Magnitude of the Survivor Problem

The number of dependents receiving death compensation from the Veterans' Administration on June 30 of each year was as follows, excluding a very small number of Civil and Indian War widows and children:

There are additional numbers of beneficiaries who are not receiving the death compensation but who are receiving payments under the Government life insurance, Servicemen's Indemnity, and/or the Federal Employees Compensation Act. The total number of beneficiaries from all sources, with duplications eliminated, is estimated at about 900,000 on June 30, 1955. A gradual increase in the number can be anticipated for a considerable period in the future.

Currently, the total payments to survivors on account of deaths occurring in or resulting from military service amount to more than $700 million per year, consisting of

1 Only a very small part of this is currently paid out of the general revenues; the remainder is covered by Government transfers to the insurance fund in the past, or by premiums paid by policy holders.

Problem Areas

The Commission recognizes the following as the major problems in the existing structure of service-connected survivor benefits:

1. The benefits are inadequate in some cases and excessive in others. In some cases the benefits may be considerably greater than the total pay of the deceased while still alive, while in other cases they may be very small as compared with pay.

2. The amounts payable for the deaths of comparable persons may be very different, without any difference in the needs of the recipients, or in the type of miliary service performed by the deceased. This arises from the application of certain laws to restricted classes of individuals.

3. The benefits are unevenly distributed over the survivor's lifetime. Too much may be paid in the early years after death

1940 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

YEAR

400,000

300,000

200,000

100,000

and too little in the later years. This again does not correspond to the needs of the recipients.

4. Benefits are paid to persons who have suffered no monetary loss due to the death. This applies particularly to Servicemen's Indemnity, but to some extent also to the other benefits.

5. There are too many agencies paying death benefits. This results in administrative waste. As a result of confusion, survivors sometimes do not receive amounts due them.

6. The social security trust fund is not now compensated for crediting military service as employment, and has been inadequately compensated in the past. On the other hand, the railroad retirement fund is now receiving what appears to be more than a reasonable compensation for the same purpose, and has received more than a reasonable amount in the past.

7. The continuation of Government life insurance by veterans on the term-insurance form will lead to widespread dissatisfaction when they reach an age when premiums begin to increase substantially. The premiums will increase eventually to the point where many of them will be unable to continue the insurance.

8. Continuing to issue new Government life insurance to nondisabled servicemen when they leave the service appears unnecessary as commercial insurance is available to them on favorable terms.

RECENT EFFORTS TO IMPROVE SURVIVOR BENEFITS

The deficiencies in the structure of survivor benefits have been recognized for some time. There have been several efforts to correct them, mostly directed at some particular phase, but there have been three efforts of a more general nature.

Interservice Committee on Survivor Benefits

This Committee, composed of representatives of all of the uniformed services, including the Public Health Service and the Coast and Geodetic Survey, prepared a report in 1952 for the Director of Personnel Policy, Defense Department, on the matter of survivor benefits. This report recommended (1) full contributory social-security coverage for the uniformed services; (2) consolidation of the Servicemen's Indemnity and the Veterans' Administration death compensation into a single benefit program; (3) benefits set at $60 per month, plus 20 percent of the gross pay; and (4) that Government life insurance that was on a premium-paying basis be paid in addition to the other benefits.