FAQs (Frequently Asked Questions) Regarding the 100% Joint and Survivor (J&S) Option
Q. What is the 100% J&S annuity option?
The 100% J&S annuity option is a pension payment method that will pay you an actuarially reduced pension and continue 100% of your monthly benefit to your Spouse after your death. The Spouse remains eligible for the benefit supplement and annual adjustments. Neither the Pensioner nor the Spouse is eligible for minimum benefits. With this option, you would receive less money while alive, but your Spouse would receive a larger benefit amount after your death than under the 50% survivor benefit. Under the survivor benefit provision, you would receive more while alive, but your Spouse would receive less benefit after your death.
Q: Why is the 100% J&S annuity option benefit reduced from the standard benefit amount?
Under the 50% survivor provisions, the Pension System pays the Member his or her normal monthly pension over their lifetime, but only one-half of that benefit to their Spouse after your death. Your pension benefit in the 100% J&S annuity option is reduced from the normal monthly benefit amount so that the System can continue full payment in the same amount to your Spouse after your death without increasing the cost to the Pension System.
Q: What is the standard survivor benefit to a Spouse?
The survivor benefit pays 50% of a Pensioner's pension amount to the Pensioner's Spouse after the Pensioner's death. Any eligible Children (generally under age 19) share in the remaining 50% of the Pensioner's benefit.
Q: How much would my benefit be reduced?
The monthly benefit is actuarially reduced based on your and your Spouse's ages and life expectancies. Our actuary has provided age-based actuarial tables for calculating the reduction. Generally, the younger your Spouse, the greater the reduction from the unreduced benefit.
Q: When can I choose this option?
A: You can choose the J&S annuity option when you retire or at any time after you retire under the conditions explained below:
- You may elect this annuity option when you leave Active Service and apply for pension benefits. You cannot make the election at the time you go into DROP or while in Active DROP.
- You also may elect this annuity option after you retire, however, you must meet a one-year qualifying period. If you die within one year after making the election, the option becomes void and your Spouse is not eligible for the 100% J&S annuity option. In this event, any survivor benefit payable to your Spouse would revert back to the 50% benefit, or special survivor benefit, if eligible and the total amount of the benefit reduction resulting from the selection of the 100% J&S annuity option during this period will be refunded to your designated beneficiary.
- If you are retired and elect, or previously elected, the Spouse Wed after Retirement (SWAR) option to provide a 50% survivor benefit to your spouse, you may increase the benefit to the 100% J&S option at the same time or any time thereafter. You must meet a one-year qualifying period – if you die within one year after making the election, the option becomes void and your Spouse is not eligible for the 100% J&S annuity option. In this event, any survivor benefit payable to your Spouse would revert back to the 50% benefit, or special survivor benefit, if eligible and the total amount of the benefit reduction resulting from the selection of the 100% J&S annuity option during this period will be refunded to your designated beneficiary.
- A Surviving Spouse of a Member who met the age and Pension service requirements for Normal Retirement (age 50 with at least 5 years of pension service) and who dies while in Active Service may elect the 100% J&S option as if the Member had left Active Service immediately before death and made this election.
Here is an example of the 100% J&S option:
EXAMPLE: With 20 years of service and average Computation Pay of $4,137, Officer Smith is entitled to a monthly benefit of $2,482 per month ($4,137 x 3% x 20). Smith elects the 100% joint and survivor annuity option when he leaves Active Service, and his benefit is reduced to $2,299 ($2,482 x 92.6080%, the reduction factor, based on Smith's and his Spouse's ages). By the time Smith dies in his 10th year of retirement, his benefit, including annual adjustments, grows to about $3,218 per month. Upon Smith's death, his Spouse would continue to receive the same $3,218 per month benefit that Smith had been receiving before his death.
The Spouse would be entitled to annual adjustments in subsequent years on the same basis as Officer Smith. In this example, Smith is eligible to receive a benefit supplement. The surviving Spouse is also eligible for a benefit supplement upon attaining age 55, reduced by the same percentage as the reduction in the basic pension benefit and annual adjustments. If this option is elected, minimum benefits do not apply. (Under the standard pension payment method, Smith's benefit would have grown to about $3,475 per month at the time of his death. With the survivor benefit, Smith's Spouse would receive one-half of his benefit amount, approximately $1,738 (assuming the Spouse does not qualify for the special survivor benefit).
Eligible surviving Children, if there are any, would share in the remaining $1,738.)
Q: I am already in DROP. Can I still select the 100% J&S annuity option?
Yes. You select your benefit option when you leave Active Service and apply for pension benefits.
Q: What do I need to consider when electing the 100% J&S annuity option?
The 100% J&S annuity option will always pay you less during your lifetime and, more to your Spouse after your death than the standard benefit provision would pay, except when you have eligible surviving Children. If your Spouse passes away before you, the reduction to your pension benefit will still remain.
- Does your Spouse have little or no other source of income?
- Will your Spouse be eligible for the special survivor benefit?
- At the time of your death, will you have any Children eligible to receive survivor benefits?
- Do you or your Spouse have health issues that likely would shorten your life span?
- Do you have an impending divorce?
Q: How does the special survivor benefit affect the decision to elect the 100% J&S annuity option?
If eligible, the special survivor benefit would entitle your Surviving Spouse to a higher survivor benefit than the 50% survivor benefit.
Because the survivor benefit payable under the 100% J&S annuity option may be only marginally higher than what is payable under the special survivor benefit provision (much less of an increase than over the 50% survivor benefit), the required reduction for the 100% annuity J&S option would be relatively small. Consequently, the potential payoff (increased benefit for your Spouse after your death) is not as large as for the standard 50% survivor benefit.
EXAMPLE: Fire Fighter Jones had 28.5 years of pension service at retirement, his pension benefit is 85.5% (3% x 28.5 years) of his Computation Pay. His Spouse's special survivor benefit would be 85.5% of the amount he is receiving when he dies.
If his standard benefit is $4,233 per month when he dies, the special survivor benefit amount payable to his Spouse would be $3,619 ($4,233 x .855-- this is a simplification of the calculation for example purposes only). Fire Fighter Jones' 100% joint and survivor annuity option benefit before his death would be approximately $4,159 ($4,233 x joint and survivor reduction factor of 98.2629% based on his age and his Spouse's age). His Spouse would receive the same amount after his death. (See the Member Handbook for information on the eligibility requirements for the special survivor benefit.)
Q: What happens if my Spouse dies before me?
This is a risk you take in choosing the 100% J&S annuity option. With the survivor benefit provision, no Surviving Spouse benefit would be paid, but you would continue to receive the reduced benefit. Eligible surviving Children or Dependent Parents and SWAR (Spouse Wed After Retirement) provisions still would apply.
Q: Can I change my mind after choosing my payment option?
No. After you elect the 100% J&S annuity option, your decision cannot be changed.
Q: If I am interested, what should I do?
Contact a Retirement Counselors at 214.638.3863 or 1.800.638.3861 for an appointment.
We Are Here to Help
We do our best to provide clear, understandable information to you. For more Member or Pensioner information, please contact us via e-mail at firstname.lastname@example.org. You also call the Pension System office at 214.638.3863 or 1.800.638.3861, and ask for a Retirement Counselor.