Death Benefits

SDCERS Members and certain beneficiaries are eligible to leave benefits upon their death to one or more beneficiaries. The type of death benefits that are available depends on whether the Member is working, deferred, or retired; what benefit option was chosen at retirement; and whether the death was caused by work.

Unless otherwise specified, “Member,” as used in this fact sheet, refers to both SDCERS Members and certain beneficiaries who are eligible to leave death benefits through SDCERS.

With the exception of the continuance benefit and the DROP annuity benefit, Members can name multiple beneficiaries to receive designated percentages of all other death benefits.

What to Do Upon the Death of an SDCERS Member

Upon the death of an SDCERS Member, a family member, friend, or caretaker should inform SDCERS of the death. SDCERS will then take the steps to ensure all applicable death benefits are paid to the appropriate person(s) in a timely manner.

If you need to contact SDCERS to notify us of the passing of a Member, call our Call Center at 619-525-3600 or toll-free at 800-774-4977. You will be asked to provide the Member’s name, date and place of death, and social security number.

SDCERS will send the beneficiary a packet of information containing directions regarding the necessary documentation and forms needed to begin the process of paying death benefits. SDCERS will require a copy of the deceased’s death certificate before paying out any benefits. In many cases, beneficiaries will attend a detailed counseling session with an SDCERS representative to review the death benefit process.

Death Benefit Beneficiaries

In most cases, SDCERS will pay the applicable death benefit(s) to the living beneficiary most recently named for that benefit. You can change most beneficiary designations at any time before you die, except for your continuance beneficiary designation, which is irrevocable once you enter DROP or retire. The easiest way to update a beneficiary designation is to log in to your SDCERS Member Portal and submit changes directly online.
 
It is important to keep your beneficiary designations up to date, particularly if your personal situation changes (e.g., birth of a child, death of a loved one, marriage, divorce). In the case of divorce, for example, you should file a new designation—even if you wish to continue naming your now ex-spouse as your beneficiary, you must update your designation to change your beneficiary’s status from “spouse” to “ex-spouse.” If you do not update the status of your beneficiary from “spouse” to “ex-spouse,” by law your Beneficiary designation is automatically revoked.  
 
If you are an Active Member, you will see your current beneficiary designations once a year on your Annual Membership Statement, which SDCERS usually sends by mail every July. All Members are able to view their designations through their Member Portal at any time. We recommend reviewing your beneficiary designations at least once a year.
 
No Beneficiary Designations on File
When you die, if (1) there is no beneficiary designation on file, all of your named beneficiaries have predeceased you, none of your beneficiaries can be located, or your named beneficiary is your estate, and (2) the Member’s estate is not required to be probated, then SDCERS will pay applicable death benefits in the following order:

  1. Surviving spouse or domestic partner
  2. Living children and offspring of deceased children
  3. Parents
  4. Siblings
  5. Next of kin

Death Benefits for Active Members (Before Retirement)

As used in this fact sheet, “Active Member” means an SDCERS Member who is currently employed by the City, Port, or Airport and is not in DROP.* Active Members initially designate beneficiaries when they become SDCERS Members, but may also change their beneficiary designation at any time unless prohibited by a Court order. Active Members can name anyone to be their beneficiary (i.e., does not have to be their spouse or even a family member).

However, there may be unintended consequences if the Active Member’s surviving spouse is not the named beneficiary – namely that the Industrial Death Benefit and Death While Eligible Benefit may be forfeited.

Upon the death of an Active Member, SDCERS will pay one of the death benefits described below.
 
*NOTE: Port General employees hired or rehired on or after January 1, 2009 must have completed at least five consecutive years of Port employment after each hire or rehire date before they become SDCERS Members and are eligible to leave any death benefits.
 
Active Death Benefit
If an Active Member dies before they are eligible to retire and their death is not work-related, SDCERS will pay the Active Death Benefit to the Member’s named beneficiary. The Active Death Benefit consists of the following:

  1.  Member’s employee contributions, plus interest; and

  2.  An amount equal to 1/12 of the Member’s Final Compensation, multiplied by the Member’s years of service credit, not to exceed 1/2 of the Member’s Final Compensation.

Prior to their death, a Member may elect to have all or part of the Active Death Benefit paid to their beneficiary in installments – either in equal monthly installments for the beneficiary’s life (up to 120 months) or in installments fixed in number or amount. You must inform SDCERS of this choice in writing. If a Member dies without making an election, the beneficiary has six months to choose how to receive the benefit before payment defaults to a lump sum distribution.
 
Industrial Death Benefit
This is a lifetime monthly benefit equal to 1/2 of the Member’s Final Compensation. This death benefit is only granted if:

  1. The Workers’ Compensation Appeals Board determines the Active Member’s death was work-related;

  2. The Member has not retired or entered DROP; and

  3. There is

    1. A surviving spouse who is also named as the Member’s sole beneficiary, or

    2. A child who is under the age of 18 (or under 21 for Port and Airport Members).

 Assuming the above conditions are satisfied, SDCERS will pay the Industrial Death Benefit to the Member’s surviving spouse for life, unless they choose to receive a lump sum payment of the actuarial present value. If there is no surviving spouse, or if the surviving spouse dies before all of the Member’s remaining children reach age 18 (or 21 for Port and Airport Members), then SDCERS will continue paying this benefit in equal shares to the Member’s children until they reach age 18 (or 21 for Port and Airport Members).
 
Payment of the Industrial Death Benefit ends when the surviving spouse dies and there are no remaining children under the age of 18 (or 21 for Port and Airport Members).
 
Death While Eligible Benefit
This monthly lifetime benefit is equal to 1/2 of the monthly pension benefit the Member would have received had the Member retired on the date of death and selected the maximum benefit.
 
This death benefit applies only to an Active Member who, at the time of their death:

  1. Is age and service-eligible for a service retirement;

  2. Has not retired or entered DROP; and

  3. There is

    1. A surviving spouse who is also named as the Member’s sole beneficiary, or

    2. A child who is under the age of 18 (or under 21 for Airport and Port Members).

 Assuming the above conditions are satisfied, SDCERS will pay the Death While Eligible Benefit to the Member’s surviving spouse for life, unless they choose to receive a lump sum payment of the actuarial present value. If there is no surviving spouse, or if the surviving spouse dies before all of the Member’s remaining children reach age 18 (or 21 for Port and Airport Members), then SDCERS will continue paying this benefit in equal shares to the Member’s children until they reach age 18 (or 21 for Port and Airport Members).
 
Payment of the Death While Eligible Benefit ends when the surviving spouse dies and there are no remaining children under the age of 18 (or 21 for Port and Airport Members).

Death Benefits for Retirees and DROP Participants

When a Member retires or enters DROP, they must make one or more important beneficiary designations on their retirement or DROP application:

  1. A continuance beneficiary, if the Member chooses the Maximum Benefit (Married), Social Security Integrated Option (for City Members), or Options 2, 3, or 4;

  2. One or more beneficiaries to receive their DROP account, or a single beneficiary to receive their DROP annuity; and/or

  3. One or more beneficiaries to receive the $2,000 retiree death benefit and other payable monies.

 Please see the Retirement Benefit Options fact sheet for more information about the specific death benefits associated with each retirement benefit option.
 
Continuance Benefit
You will designate a continuance beneficiary when you retire or enter DROP if you choose the Maximum Benefit Option, the Social Security Integrated Option (for City Members), or Options 2, 3, or 4.  A continuance benefit is a designated percentage of your monthly pension benefit that, upon your death, will be paid to your continuance beneficiary every month for the remainder of their life. A continuance beneficiary is eligible to receive any approved Cost of Living Adjustments (COLAs) applied to pension benefits every July. No continuance benefit will be paid to a survivor of the continuance beneficiary and a continuance benefit cannot be paid to an estate or trust.
 
 IMPORTANT: Once a Member has retired or entered DROP, the beneficiary named to receive a continuance benefit is irrevocable.
 
DROP Death Benefits
If you die while participating in DROP, your beneficiary designated to receive your DROP account balance will receive all of the funds in your DROP account, including interest. If you named only one beneficiary, they may elect to receive the DROP account either in a single lump sum payment or in equal monthly installments over their life expectancy. However, if you named multiple DROP beneficiaries, they will each receive their proportionate share of your DROP account in single lump sum payment.
 
When you exit DROP, if you choose to annuitize your DROP account balance, you may name only one beneficiary to receive the DROP annuity in the event of your death – your DROP annuity cannot be distributed to multiple beneficiaries. If you name more than one beneficiary for your DROP annuity, your beneficiaries will divide the remaining balance in your DROP account equally and receive proportionate lump sum payments.
 
However, if you’ve named a single beneficiary to receive your DROP annuity, they may choose to continue the monthly payments until all payments have been made, or they may elect to receive the remaining principal balance in a lump sum within 90 days of your death. If the beneficiary dies before all of the payments have been made, SDCERS will pay the remaining principal balance in a lump sum to the beneficiary’s estate or designee.
 
NOTE: If your beneficiary elects to continue the monthly payments, they can later elect to receive the present day value of the remaining payments in a lump sum.
 
$2,000 Retiree Death Benefit & Other Payable Monies
All SDCERS retirees can name a beneficiary for a $2,000 retiree death benefit. This beneficiary designation can be changed at any time. Besides $2,000, this benefit may also include additional monies such as:

  • Unpaid 13th Check accrued to the Member on a prorated basis as of the date of death;

  • Unpaid Corbett benefits accrued to the Member on a prorated basis as of the date of death; and

  • Unpaid pension benefit if the Member died before receiving that month’s payment.

Deferred Members

Deferred Members are former SDCERS Members who have terminated employment with their SDCERS plan sponsor and left their contributions on deposit with SDCERS. If a Deferred Member dies, their named beneficiary will receive a refund of all of the Deferred Member’s contributions, plus interest, in lump sum. Even if the Deferred Member is age-eligible and service-eligible for retirement at the time of death, their beneficiary is not eligible for any other death benefits covered in this fact sheet.

The information in this publication is intended to provide Members with a current and accurate summary of retirement benefits. However, it is not a legal document or a substitute for the law. The language used in this publication is not intended to create a contract between the City, Port, or Airport and any Member. The governing plan document adopted by the Member's employer governs the operations of SDCERS. Accordingly, if any information in this publication conflicts with the employer's plan document, the law, or Board Rules, then the plan document, law, or Board Rules must prevail.