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 pension payment options to choose from. All of them will provide you with a monthly benefit for life. Some 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.

That’s a lot to think about, so let’s make this clearer with an example.

Pension Payment Option 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, depending which option she chooses, her grandkids would split her reduced benefit amount for the rest of that period.

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

There are several options that leave a lifetime benefit. Under these options, you can only name one beneficiary. Benefit amounts are determined based on the birth dates (life expectancy) of both the retiree and their beneficiary, so Jane will receive less of a pension reduction leaving a benefit to her husband than she would if she were to consider leaving a lifetime benefit to a grandchild.

Under the Joint Allowance — Full or Joint Allowance — Half option, if a retiree dies, depending which option they choose, their beneficiary would receive half or all of their reduced benefit for life.

Under the Pop-Up/Joint Allowance — Full or Pop-Up/Joint Allowance — Half option, if a retiree dies, depending which option they choose, their beneficiary would also receive half or all of their reduced benefit. These options reduce the pension a little more, but they have an advantage: If the 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 and whether you’ll leave a pension benefit to a beneficiary or beneficiaries, you may also want to consider questions such as:

  • Do you qualify for a death benefit?
  • Do you have life insurance?
  • Do you have a mortgage, unpaid loans or other monthly payments that will have to continue 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. Most NYSLRS members can also create their own pension estimate in minutes using Retirement Online. You can enter different retirement dates to see how those choices would affect your benefit. When you’re done, you can print your pension estimate or save it for future reference.

7 thoughts on “Choosing Your Pension Payment Option

  1. Tired911Dispatcher33years

    Now that the Gov classified 911 Dispatchers First Responders – What is the status of a 25 year retirement plan? like nypd and fdny comm’s center rec’d years ago, the rest of the state is supp to piggy back off of their plan now. that’s what we were told anyways.

    Reply
    1. NYSLRS

      To see if your employer is offering a 25-year retirement plan with NYSLRS, we recommend contacting your Human Resources department.

      Reply
      1. Tired911Dispatcher33years

        they are telling me to contact you, you are telling me to contact them this is the problem in NYS pass the buck. Last I checked NYS is my retirement system since (1989) and oversees Tier 4 public employees.

        Reply
        1. NYSLRS

          If your employer decides to adopt a 25-year retirement plan, NYSLRS would administer that plan.

          For questions about your existing retirement benefits, please contact our customer service representatives. You can email them using the secure email form on our website (http://www.emailNYSLRS.com). One of them will review your account and respond to your questions. Filling out the secure form allows them to safely contact you about your personal account information.

          Reply
    1. NYSLRS Post author

      Your employer provides us with your days worked, and we use that data to determine your service credit.

      For other questions about your service credit, please email our customer service representatives using the secure email form on our website. One of them will review your account and respond to your questions. Filling out the secure form allows them to safely contact you about your personal account information.

      Reply

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