At retirement, a member must elect a pension payment option, which determines how the retirement benefit will be paid. There are several options that a member can choose from. All options will pay the member a monthly benefit for life. The Single Life Allowance is the maximum benefit available. Or, a member can choose to receive a reduced monthly amount to provide for a possible payment to a designated beneficiary after their death.
Some DROs require the member to elect a pension payment option that provides a continuing benefit to their ex-spouse should the member die before them. Generally, this is one of the joint allowance options. The parties should be aware that:
- The member cannot change their pension payment option or, for joint allowance options, their option beneficiary, once the retirement is effective; and
- Under joint allowance options, the member cannot designate additional option beneficiaries (for example, if the member remarries) even though the ex-spouse may only be receiving a small share of the overall pension benefit.
For a full description of each option, see the Pension Payment Option Descriptions page.
Joint Allowance and Pop-Up Joint Allowance Options
Joint Allowance options are based on the member’s birth date and the birth date of one beneficiary. The beneficiary will receive a percentage of the member’s pension benefit upon the member’s death. Available options include the Joint Allowance Full (100 percent), Joint Allowance Half (50 percent) or any other percentage.
With a Joint Allowance, if the beneficiary dies before the member, the member will continue to receive the same monthly amount they had been receiving, and all payments will stop at when the member dies.
Under a Pop-Up Joint Allowance, if the beneficiary dies before the member, the member’s pension benefit will “pop up” to the maximum amount payable under the Single Life Allowance option, and all payments will stop when the member dies.
There is a larger benefit reduction (cost) for the Pop-Up Joint Allowance in order to provide the “Pop-Up” increase in the member’s monthly benefit.
Special Joint Allowance
Some DROs require the member to provide the ex-spouse with their marital share of the pension benefit should the member die before them. This pension payment option is called the Special Joint Allowance. Unlike the joint allowance options described above, the Special Joint Allowance continues to pay the ex-spouse the same amount they had been receiving before the member’s death. It is only available to members with a DRO that requires its election.
The Special Joint Allowance provides the member with a reduced lifetime benefit based on the member’s birth date and the birth date of the ex-spouse. If the ex-spouse dies before the member, all payments stop at the member’s death.
If the DRO requires the member to elect the Special Joint Allowance, we will provide the member with a customized pension payment option election form during the processing of their retirement application.
Who “Pays” the Cost of the Option?
When NYSLRS refers to the cost of a pension payment option, we are referring to the amount that a member’s pension benefit will be reduced in order to provide for a payment to a beneficiary after the member’s death (it is not an expense related to administering the option). The cost can be allocated in the following ways:
- The member bears the cost of the option;
- The ex-spouse bears the cost of the option;
- The cost of the option is shared equally (50/50); or
- The cost of the option is shared proportionately by the member and the ex-spouse.
If the member elects a pop-up option, there is an additional cost to provide for the possible “Pop-Up” increase in the member’s pension. If the DRO does not explicitly state which party pays the additional cost of a pop-up option, it will be paid solely by the member.