[back to index]

 

Beneficiaries and Survivor Options

 

By Christian Campen

Assistant Treasurer – Financial Matters

 

The obvious reason for becoming a member of the pension fund is to provide benefits for the member and their family at retirement.  In doing so, it is important to know what the member will be receiving in the future for giving up $15 on a monthly basis today.  At the time of this letter, the full benefit is $788 per month.  Age, years of service and selected benefit option are factors that will determine whether the member will receive the full $788 or end up higher or lower than that amount.  The first two factors are fairly easy; age at retirement and the years of creditable service in the fund.  The member must be at least 50 years of age to receive early retirement, but full retirement benefits begin at age 55. For every year under the age of 55, there is a 6% reduction in the retirement benefit.  Secondly, the member must have at least 15 years of creditable service in the fund to be vested (a non-forfeitable right to a pension is earned when the member leaves the fire service), however fully vested status occurs at 25 years of creditable service.  If retirement is taken with less than 25 years, 4% is deducted for each year under the full 25 years of creditable service.  On the plus side however, a member can earn an additional 2% for each year over 25 years of creditable service.  We’ll run these through some examples shortly, but one final factor plays a role in determining how much is drawn at retirement...the survivor benefit option chosen.  It is this choice that confuses most people.  Therefore, it is our intent in this article to go into detail on each of these options in order to clarify them further.

 

The first thing that must be done on joining the pension fund is selecting a beneficiary.  A beneficiary is any person designated from time to time before or after the approval of an application for retirement by the member, in writing,  on forms prescribed by the Board of Trustees,  to receive benefits which continue to be payable upon the death of the member.  In the “Application for Membership Forms”, which must be notarized, there is an area designated to select a beneficiary.  This allows the member to specify a beneficiary that will receive the death benefit if the member passes away prior to becoming vested.  Prior to becoming vested (15 years), the member may choose anyone for a beneficiary and that person will receive the death benefit if the member passes away, regardless of who the person is.  If the member chooses to change the beneficiary pre or post retirement, a “Change of Beneficiary Form” may be filled out and notarized.  Prior to retiring, the member must fill out a “Beneficiary Designation & Election of Optional Benefit Form”, which allows for selecting the survivor benefit option and beneficiary they so choose.  We strongly urge the member to fill one of these forms out once vested for the following reason:  Georgia law states that if a member is married and that member passes away, the benefit automatically goes to the surviving spouse, unless specified otherwise (see JOINT & SURVIVOR OPTION).  If intentions are to leave it for a child, family member, or someone other than a spouse, the TEN YEAR CERTAIN & LIFE OPTION must be selected and have that person named as the beneficiary.  Also, if intentions are to leave a benefit with more than one child, the TEN YEAR CERTAIN & LIFE OPTION must be selected and “estate” or “trust” named as the beneficiary.  It will then be distributed in accordance with the member’s will.

 

There are three survivor benefit options available to retiring members for the disposition of their retirement benefits post mortem (this feature is one of those that help make this plan one of the best in the country!)  The following paragraphs describe each of the options and their usage in detail. 

 

The first option is REGULAR RETIREMENT, and is the easiest of all to understand.  The retiree will receive a full benefit payment, based on age and number of years of creditable service with the pension fund, until their death at which time their named beneficiary will receive their last check.  Emphasis shall be placed on “full benefit payment”.  As long as the member has 25 years of creditable service and is at least age 55, they will receive $788 per month as it currently stands (this amount may be adjusted on a semi-annual basis in the event of a COLA).  However as we discussed earlier, if the member retires before 55 or has less that 25 years of creditable service, that amount will be adjusted down.  The following are some examples of how the benefit can be adjusted: 

 

 

 

 

Early Retirement

Age

Years Creditable Service

Benefit Amount

50

25

$552

50

15

$331

 

Full Retirement

Age

Years Creditable Service

Benefit Amount

55

25

$788

 

Retirement Plus

Age

Years Creditable Service

Benefit Amount

55

30

$867

55

35

$946

           

The second option, the JOINT & SURVIVOR OPTION, is intended solely for members legally married under the Georgia Statutes.  Under this option, the retired member will receive a reduced benefit payment based on the normal factors of age and years of creditable service, as well  as a new factor, the age of the spouse.  Why the age of the spouse?  The fund is now paying for the life of the member as well as the life of the member’s spouse.  Female spouses tend to be younger than male members and this coupled with the fact that females outlive males, means a longer benefit payment stream for the fund to provide.  The member will receive a benefit payment until they die, at which point the spouse starts receiving a benefit payment based on the percentage allocated for them to receive.  The options for allocation to the spouse are 50%, 66 2/3%, 75% and 100%.  If a member chooses 100%, the most common election, the benefit will be decreased somewhat, however the spouse will receive the same amount the member was receiving before passing away.  The higher the percentage chosen for the spouse, the lower the member’s benefit payment will be, but the higher the spouse’s benefit payment will be after the member’s death.  Let’s put this in terms of money as we did before:  The first number under benefit percentages is the member and the second is the spouse.

 

Early Retirement

 

Member age

 

Spouse age

Years Creditable Service

 

50%

 

 

66 2/3%

 

75%

 

100%

50

50

25

$520 / $260

$510 / $340

$506 / $380

$492 / $492

50

50

15

$312 / $156

$306 / $204

$303 / $227

$295 / $295

50

35

25

$503 / $252

$488 / $325

$481 / $361

$462 / $462

50

35

15

$302 / $151

$293 / $195

$289 / $217

$277 / $277

 

Full Retirement (For illustration purposes, we also show spouse of different age)

 

Member age

 

Spouse age

Years Creditable Service

 

50%

 

 

66 2/3%

 

75%

 

100%

55

55

25

$733/ $367

$717 / $478

$709 / $532

$685 / $685

55

50

25

$721/ $361

$701 / $467

$692 / $519

$665 / $665

55

40

25

 $699 / $350

 $674/ $449

 $662/ $497

 $629/ $629

 

Retirement Plus

 

Member age

 

Spouse age

Years Creditable Service

 

50%

 

 

66 2/3%

 

75%

 

100%

55

55

30

$806 / $403

$788 / $525

$779 / $584

$754 / $754

55

40

30

$769 / $385

$742 / $495

$728 / $546

$692 / $692

55

55

35

$880 / $440

$860 / $573

$850 / $638

$823 / $823

55

40

35

$839 / $420

$809 / $539

$795 / $596

$755 / $755

 

 

A few things to note regarding this option: 

¯     If the member’s spouse predeceases the member, the member may, in writing to the Board, revoke this option and receive the maximum monthly retirement benefit at the time of retirement.  This scenario also holds true in the event of divorce between the member and the member’s spouse. 

¯     If, following the death of a member’s spouse or final divorce from the member’s spouse, the member remarries, the member may write to the Board and re-elect this option with regards to the new spouse, so long as the marriage to the new spouse has been for at least one year or a child of the married couple is born, whichever is earlier. 

¯     The member must be married at the time of retirement to elect this option. 

¯     If the member chooses not to elect an option and passes away after accruing at least 15 years of creditable service but before applying for retirement and is survived by a spouse, the surviving spouse will receive the benefit as if the member had elected to receive 100% of the member’s benefits under the Joint and Survivor option.  The benefits will commence on the date the deceased member would have turned age 55, or at the option of the surviving spouse the date the deceased member would have reached age 50 at the applicable early retirement factor.

 

The final option is the TEN YEARS CERTAIN & LIFE OPTION in which the retiree will receive a reduced benefit payment and will draw this payment until their death.  In the event of the death of a member after retirement, but prior to receiving benefits for ten years, the beneficiary will receive the same monthly benefits that would have been paid to the member to finish out the ten year period.  If the member lives beyond ten years after commencing receipt of benefits, they continue to receive the same benefit for their lifetime, but the beneficiary only receives the last check.  Quite simply, this option guarantees a benefit for 10 years.  It is ideal for non-married members who would like to protect someone whether it is their child or family friend or whomever in the event of their death.  However, we have had married members choose this option with their spouse as the beneficiary in order to receive an increased benefit payment, but provide some protections for the spouse if the member were to pass away before the ten years are expired.  Again, to put it in perspective with the other two options, we will put it in numbers:

 

 

 

Early Retirement

Age

Years Creditable Service

Benefit Amount

50

25

$540

50

15

$324

 

Full Retirement

Age

Years Creditable Service

Benefit Amount

55

25

$760

 

 

 

Retirement Plus

Age

Years Creditable Service

Benefit Amount

55

30

$836

55

35

$912

           

 

 

We have supplied real life examples for each of the three options.  This demonstrates how the election of each benefit option directly affects the amount to be received in the future.  There are a few further observations that we would like to pass on to current and potential members.

 

¯     When becoming vested, it is important to double check the beneficiary and make sure the pension fund has the proper person on file for receiving the benefits.

¯     If the member chooses the JOINT & SURVIVOR OPTION prior to retiring or on joining, they should consider electing the 100% allocation for their spouse in case of an uneventful death before retirement.  We have had times where a member has elected for the spouse to receive 50% and passes away before retirement.  In this case the spouse would only collect 50% of the benefit if the member died.  The member can always go back and change the percentage at the time of retirement.  Just be sure to do so.

If currently a member, or planning to become a member, we encourage the use of our website.  There are two pension estimators on the site.  One is general for those thinking of becoming a member.  A member can input the factors similar to what’s been done above to better fit their situation.  The second one is under the member’s area and pulls more specific information using the member’s file on record.

 

We realize that the options can be confusing at times and we will continue to do everything we can to better serve our membership.  Discussions of beneficiaries can be a sensitive issue, but even more so is the death of a member, and having thought through the process can save families grief during a most difficult time.  We are available to help members work through the details and offer insights if need be.  We hope that this article is helpful and enlightening and extend the invitation to call us if there are any questions whatsoever (404) 370-5070.

     

 

 

[back to index]