Before you can retire or enter DROP, you must select a retirement benefit option, which determines the amount of your monthly pension benefit and what kind of death benefit you can leave to a beneficiary. All of the options listed on your retirement or DROP entry application are explained below. Some of these benefit options allow you to leave a continuance benefit. For more information about what a continuance benefit is, please refer to the Death Benefits Fact Sheet.
Married – Provides an unmodified lifetime monthly pension benefit to the retiree. Upon death of the retiree, the surviving spouse will receive a lifetime monthly benefit equal to 50% of the retiree’s monthly pension benefit. However, if the Member retired or entered DROP before 1995 or after September 18, 2008, the surviving spouse named to receive this continuance benefit must have been married to the retiree on the date of their retirement and on the date of the retiree’s death; if the Member and their continuance beneficiary are not married on the date the retiree dies, the 50% continuance benefit will be forfeited. Similarly, the 50% continuance benefit will be forfeited if your continuance beneficiary predeceases you. In neither case will your pension benefit be recalculated.
Single – Only an option for unmarried members. Provides an unmodified lifetime monthly pension benefit to the retiree. The retiree receives a refund of the “surviving spouse” contributions paid into their retirement account via cash refund, rollover of pre-tax portion, or annuitized monthly payments. Does not allow the retiree to leave a continuance benefit upon their death. Note: If you are planning to select Maximum Benefit (Single), you cannot be legally married or in a domestic partnership on the day you enter DROP or service retire. If you select this benefit option and you are married or in a domestic partnership, you may be required to pay back a portion of your pension benefits and/or have your monthly pension benefit reduced.
Provides an actuarially reduced lifetime monthly pension benefit to the retiree. Upon death of the retiree, the remaining balance (if any) of the Member’s employee contributions and interest will be paid to their designated beneficiary or estate in one lump sum payment or as a short-term annuity. Does not provide a continuance benefit.
Options 2-4, explained below, allow a Member to take a reduced monthly pension benefit for their lifetime in exchange for guaranteeing a lifetime monthly continuance benefit to a beneficiary that does not have to be their spouse. These options are provided to assist Members with terminal illnesses, reduced life expectancy, divorce decrees, or other specific planning needs. Although the continuance beneficiary does not have to be the Member’s spouse, it does have to be a person (e.g., cannot be a trust or estate) and the Member can only name one continuance beneficiary. Also, continuance beneficiaries will receive the following benefits (if eligible) in the same ratio as their monthly benefit bears to the Member’s monthly pension benefit: Annual Supplemental Benefit, Corbett, and COLA.
IMPORTANT: The continuance beneficiary designation cannot be changed after the Member enters DROP or retires. If the continuance beneficiary predeceases the retiree, then the retiree’s pension benefit ends upon the retiree’s death.
Provides an actuarially reduced lifetime monthly pension benefit to the retiree. Upon death of the retiree, their designated continuance beneficiary will receive a lifetime monthly benefit equal to 100% of the retiree’s reduced monthly pension benefit. The amount the retiree’s benefit is reduced depends on the age difference between the retiree and their continuance beneficiary – the greater the age gap, the greater the reduction.
NOTE: Federal tax law may limit the percentage of your benefit you may leave as a continuance to a non-spouse depending on the age difference and your age at retirement. To calculate the maximum percentage you can leave to a non-spouse, follow the guidelines outlined here.
Provides an actuarially reduced lifetime monthly pension benefit to the retiree. Upon death of the retiree, their designated beneficiary will receive a lifetime monthly benefit equal to 50% of the retiree’s reduced monthly pension benefit. The amount the retiree’s benefit is reduced depends on the age difference between the retiree and their continuance beneficiary – the greater the age gap, the greater the reduction.
Provides an actuarially reduced lifetime monthly pension benefit to the retiree. Before retiring, the Member selects a percentage (between 0-100%) of their reduced monthly pension benefit that will be paid to their continuance beneficiary for the remainder of the beneficiary’s life after the retiree dies. The higher the selected percentage and the greater the age gap between the retiree and their continuance beneficiary, the bigger the reduction in the retiree’s monthly pension benefit.
NOTE: Federal tax law may limit the percentage of your benefit you may leave as a continuance to a non-spouse depending on the age difference and your age at retirement. To calculate the maximum percentage you can leave to a non-spouse, follow the guidelines outlined here.