Tag Archives: Single-Life Allowance

Certain Payment Options Provide a Lifetime Benefit for a Loved One

When you apply for a NYSLRS pension, you’ll be asked to pick a pension payment option. All options will provide you with a monthly benefit for the rest of your life. With the Single Life Allowance, all payments stop at your death and nothing is paid to a beneficiary.

Infographic describing pension payment options

Providing for a Beneficiary

If you’re married and need to provide for your spouse, or if you have someone else you would like to provide a lifetime pension for after you’re gone, there are payment options that let you do that.  In exchange for a reduction in your monthly payment, Joint Allowance options allow a beneficiary to collect 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. That means the younger your beneficiary, the deeper the reduction.

You can only choose one beneficiary under a Joint Allowance option, and your beneficiary selection cannot be changed after you retire, regardless of the circumstances. The benefit reduction for Joint Allowance options will continue even if your beneficiary dies before you do.

If we could predict the future, pension choices would be a lot easier. But a Pop-Up payment option is one way to hedge your bet. Like Joint Allowance options, these plans allow you to provide a lifetime payment for a beneficiary after your death. But if your beneficiary dies before you, your future monthly payments would be increased to the amount you would have been receiving had you chosen the Single Life Allowance. (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.

Find Out More

There are also 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. Visit our Payment Option Descriptions page for details about all of the available payment options.

For a better idea of how these payments options would work out for you and your beneficiary, you can use our online pension projection calculator. It uses the information you enter to show how much you could expect to receive under each option. Most members who are within five years of retirement eligibility can also request a benefit projection by contacting our Call Center at 1-866-805-0990, or you can submit a Request for Estimate form (RS6030).

Can I Change My Beneficiary After I Retire?

That depends. Some beneficiary decisions are irrevocable, while others can be changed at any time.

Some options, such as Five Year and Ten Year Certain, allow you to change your beneficiary after you retire. But if you choose an option that provides a lifetime benefit to a survivor, you cannot change your beneficiary even if your beneficiary dies before you do. For details, visit the Payment Option Descriptions page on our website.

But there are other possible death benefits for which NYSLRS retirees can name beneficiaries. Available death benefits and eligibility requirements vary by tier and retirement plan. You can find your retirement plan information on our Publications page.

NYSLRS retirees may have up to three types of death benefits that could provide a benefit for a beneficiary: pension payment option, survivor's benefit, and post-retirement death benefit.

When you retire, you must choose a payment option for your NYSLRS pension. If your choice is Single Life Allowance, there is no pension beneficiary. But other payment options provide a reduced monthly benefit in exchange for a possible payment to a beneficiary after the retiree’s death.

If you were employed by New York State, you may be eligible for a survivor’s benefit of up to $3,000. You do not need to sign up for this benefit; you are automatically enrolled if you are eligible. If you choose a pension payment option with a beneficiary, that person will also be the beneficiary for your survivor’s benefit. If your beneficiary dies before you do, you may select someone else as beneficiary for the survivor’s benefit. If you choose the Single Life Allowance option, you must name a beneficiary for your survivor’s benefit, and you may change this designation at any time.

What about after Retirement?

You may also be eligible for a post-retirement death benefit, which would be a percentage of the death benefit that was payable at retirement. (This benefit is generally not available to Tier 1 members or members in special retirement plans that allow for retirement after 20 or 25 years of service, regardless of age.) The beneficiary of your post-retirement death benefit does not have to be the same as your pension payment-option beneficiary. And you can change the beneficiary designation for your death benefit at any time.

The easiest way to check and update your beneficiary information for the post-retirement death benefit is with Retirement Online. You can also change your beneficiary by submitting a Designation of Beneficiary (RS5127) form.

Divorced? Some things to consider

Please note: If you are divorced, you may be required to choose a retirement option that provides continuing benefits to your ex-spouse after your death. Also, the beneficiary designation for certain benefits, including the survivor’s benefit, can be revoked when a divorce becomes final. For more information, please read the publication Divorce and Your Benefits on our website.

Choosing Your Pension Payment Option

When you retire from NYSLRS, you’ll need to decide how you want to receive your pension benefit.

You’ll have several options. All of them provide a monthly benefit for life. Some also provide a limited benefit for one or more beneficiaries after you die. Others let you pass on a monthly lifetime pension to a single beneficiary. Each option pays a different amount, depending on your age at retirement, your beneficiary’s age and other factors.

Pension Payment Option

That’s a lot to think about, so let’s make this clearer with an example. Meet Jane. Jane plans to retire at age 60, and she has a husband, a granddaughter and a grandson who are financially dependent on her. First, Jane needs to decide whether she wants to leave a benefit to someone after she dies. She does.

That eliminates the Single-Life Allowance option. While it pays the highest monthly benefit, all payments stop when you die.

Jane considers naming her grandchildren as beneficiaries to help pay for their college education.

The Five Year Certain and Ten Year Certain options don’t reduce her pension much, and they allow her to name more than one beneficiary. If Jane dies within five or ten years of retirement, her grandkids would split her normal benefit amount for the rest of that period.

However, the Five and Ten Year options wouldn’t be lifetime benefits. Since her husband doesn’t have his own pension, she’ll leave him her pension and look into a tax-deferred college savings plan for her grandkids instead.

There are a few options that leave a lifetime benefit:

The Joint Allowance — Full and Joint Allowance — Half options continue paying all or half of the retiree’s normal benefit amount to the beneficiary for life.

The Pop-Up/Joint Allowance — Full and Pop-Up/Joint Allowance — Half options also continue the retiree’s normal benefit. They reduce the pension a little more, but they have an advantage: If a retiree outlives his or her beneficiary, the retiree’s monthly payment will “pop up” to the maximum payable under the Single-Life Allowance option.

As you plan for your own retirement, you may also want to consider questions, like:

  • Do you qualify for a death benefit?
  • Do you have life insurance?
  • Do you have a mortgage or unpaid loans that will have to be paid if you die?

These and other factors can significantly impact your retirement planning.

To find out more about pension payment options, check your retirement plan booklet on our Publications page. You can also try our Benefit Calculator, which allows most members to estimate their benefits under the different payment options. For tips on developing a financial strategy that works for you, take a look through Straight Talk about Financial Planning for Your Retirement.