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Some Pension Payment Options Can Provide a Lifetime Benefit for a Loved One

When you apply for a NYSLRS pension, you’ll need to choose a payment option, which determines how your retirement benefit will be paid. All options will provide you with a monthly benefit for the rest of your life. The single life allowance option pays the highest monthly benefit, but all payments stop at your death. If you choose a different option, you may be able to provide a lifetime benefit to a beneficiary.

You can apply for service retirement through Retirement Online. One of the benefits of applying online is that you’ll see a projection of your pension payment under each option before you’re asked to select one. If you submit your retirement application by mail, you’ll need to mail a paper option election form.

payment options

Joint Allowance Payment Options

In exchange for a reduction in your monthly payment, joint allowance options pay your beneficiary all or part of your pension after you die. The amount of the reduction in your pension is based on your life expectancy and the life expectancy of your beneficiary. The reduction is permanent even if your beneficiary dies before you do.

You can only choose one beneficiary under a joint allowance option, and you can’t change your beneficiary after you retire, regardless of the circumstances. If your beneficiary dies before you, all payments will stop when you die.

Pop-Up Payment Options

Like joint allowance options, pop-up options allow you to provide a lifetime payment for a beneficiary after your death. But, if your beneficiary dies before you, your future monthly payments will increase to the amount you would have been receiving had you chosen the single life allowance at retirement. (The pop-up only affects future payments. You would not be entitled to any retroactive payments.)

The monthly reduction in your benefit will be greater if you choose a pop-up option over a regular joint allowance.

Payment Options for Multiple Beneficiaries

There are options that allow you to leave a monthly payment to more than one beneficiary, and options that leave a benefit for a certain amount of time. For more information, visit our Payment Option Descriptions page.

Consider Your Decision Carefully

There are many factors that might influence your payment option choice. Your age and overall health, the age and health of your partner, and your loved one’s access to other financial resources should all be considered.

You only have 30 days after the last day of your retirement month to change your option. After that date, you cannot change your option for any reason.

An important step in retirement planning is finding out how much you can expect to receive. Most members can use Retirement Online to create a pension estimate based on the salary and service information we have on file for them. You can enter different retirement dates and beneficiaries to see how they affect your potential benefit and pension payment options. Go to the ‘My Account Summary’ section of your Retirement Online Account Homepage and click the “Estimate my Pension Benefit” button. You can also ask NYSLRS to send you a benefit estimate that calculates your pension under the various options.

Other Death Benefits

Most NYSLRS retirees are eligible for a post-retirement death benefit if they retire directly from payroll or within one year of leaving covered employment. Eligibility depends on your retirement plan and tier. If you are eligible, your beneficiary will receive a one-time, lump sum payment. The amount of the post-retirement benefit is a percentage of the death benefit available during your working years. For information about this and other potential death benefits, please visit our Death Benefits for Retirees page.

Five and Ten Year Pension Payment Options

NYSLRS pension payment options are designed to fit your needs after you retire. Understanding these options will make it easier for you to choose the one that’s right for you.

While the basic option, the Single Life Allowance, would provide you with a monthly payment for the rest of your life, all payments would end at your death. Other options, in exchange for a reduced benefit, allow you to provide for a spouse or other loved one after you’re gone.

Five and Ten Year Certain options don’t provide a lifetime benefit for a beneficiary, but they have advantages you may want to consider.

pension payment options

How These Pension Payment Options Work

The Five Year Certain or Ten Year Certain options provide you with a reduced monthly benefit for your lifetime. If you die within the five- or ten-year period after your retirement, your beneficiary would receive pension payments for the remainder of the five or ten years. If you live beyond the five- or ten-year period, your beneficiary would not receive a pension benefit upon your death.

Let’s say you choose the Five Year option. If you die two years after retiring, your beneficiary will receive a benefit for three years. If you choose the Ten Year option, and die after two years, your beneficiary will get a benefit for eight years. In either case, your beneficiary would receive the same amount you were receiving, though they would not be eligible for any COLA increases.

Another feature of these plans is that you can change the beneficiary at any time within the five- or ten-year period.

Whatever your situation, you should review the payment options and choose carefully. Visit our Payment Option Descriptions page for details about all available pension payment options. For a better idea of how these payment options would work out for you and your beneficiary, try our online Benefit Calculator.