In addition to age, service credit and final average compensation, the amount of your retirement benefit is also affected by the benefit payment option you elect at the time of your retirement. The payment option determines the benefit that will be paid to you for your lifetime as well as any benefit that will continue to be paid to your beneficiary after your death.
Your election is irrevocable and cannot be changed once you receive your first benefit payment.
Unmodified Benefit
The Unmodified Benefit is the highest benefit possible. When you die after retiring, and provided you were married/state-registered for at least one year at the time you retired, your surviving spouse/state-registered domestic partner will receive a lifetime benefit equal to 60% of the benefit you were receiving at the time of your death.
If you marry/partner after you retire, or are married less than one year prior to retirement, you must be married/state-registered for at least two years prior to your death and your spouse/partner must be at least age 55 at the time of your death to be considered eligible for the continuance.
If you do not have a spouse/state-registered domestic partner but have unmarried minor children under age 18, or up to age of 22 if in school full time and not married, there is a 60% continuance available as long as they remain eligible.
If you choose the Unmodified Benefit and do not have an eligible spouse/partner or minor child to receive the survivor's continuance at the time of your death, any remaining balance in your member contribution account will be paid as a one-time lump-sum payment to your designated beneficiary or your estate.
Option 1: Cash Refund Annuity
This option provides that after your death a lump sum payment of your remaining member contributions will be paid to any beneficiary you choose. How much remains of your member contributions will depend on how long you had been retired.
Each month when you receive your retirement benefit, a portion of it comes from your contributions. Therefore, the amount of your contributions available to a beneficiary after your death gets smaller each month.
This option does not provide a continuance to your named beneficiary.
Option 2: 100% Joint and Survivor Continuance
This option allows you to take a reduced monthly benefit in order to provide the same benefit to a beneficiary of your choice following your death. Under this option the amount paid after your death will be 100% of the monthly amount paid to you during retirement. The amount of the benefit reduction is based on the life expectancies of you and your designated beneficiary and may be sharply reduced if your beneficiary is much younger than you are. Also, If you name a beneficiary who is more than 10 years younger than you and who is not your spouse, the Internal Revenue Code requires further reductions to the survivor's continuance.
If you elect this option you can only change your beneficiary after retirement if your beneficiary predeceases you. Your retirement benefit will not be adjusted and the newly named beneficiary will only receive a lump sum refund of your remaining member contributions.
Option 3: 50% Joint and Survivor Continuance
This option allows you to take a reduced monthly benefit in order to provide a continuance to a beneficiary of your choice following your death. Under this option the amount paid after your death will be 50% of the monthly amount paid to you during retirement. The amount of the benefit reduction is based on the life expectancies of you and your designated beneficiary and may be sharply reduced if your beneficiary is much younger than you are.
If you elect this option you can only change your beneficiary after retirement if your beneficiary predeceases you. Your retirement benefit will not be adjusted and the newly named beneficiary will only receive a lump sum refund of your remaining member contributions.
Option 4: Multiple Beneficiaries
This option allows you to take a reduced monthly benefit in order to provide a continuance to more than one beneficiary upon your death. Under this option you may assign the percent of continuance to each beneficiary. The amount of the benefit reduction is based on the life expectancies of you and your designated beneficiaries.
This option is calculated by MCERA's actuary and there may be costs associated with the calculation. Please contact our office if you would like an estimate for this benefit payment option.