Arrears of Pay
Arrears of Pay is a one-time payment made to a beneficiary after your death. The arrears of pay payment to your beneficiary will include:
- The pro-rated amount of your final month’s pay, and
- Any other money owed to you at the time of your death
In most cases, the Arrears of Pay will include the pro-rated amount of your final month's retirement pay. This is because your entitlement to retirement pay ends on the date of your death. When your death is reported, DFAS will reclaim your final month's pay
and audit your account. The amount of the payment actually owed to you will then be computed and given to your AOP Beneficiary.
Why It's So Important
Failing to designate an AOP beneficiary could cause stress and financial hardship for your survivors during an already difficult time. If you do not designate an AOP beneficiary, the payment of any money that remains in your retirement account could be greatly delayed.
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.
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.
Unless otherwise noted, your AOP beneficiary will also be the person DFAS contacts for assistance in closing your account, so it is important to designate a person you trust to handle your affairs.
The AOP designation does not entitle the person named as a beneficiary(s) to SBP. A separate SBP election must be made to cover the desired individual for SBP purposes.
Designating an AOP Beneficiary
Managing Your AOP Beneficiary Designation
Order of Precedence for Payment of Deceased Retirees
What Happens when you die