FAQs (Frequently Asked Questions) Regarding the 100% Joint and Survivor (J&S) Option
Q. What is the 100% J&S annuity option?
The 100% J&S annuity option is a pension payment method that will pay you an actuarially reduced pension and continue 100% of your reduced monthly benefit to your Spouse after your death. The Spouse remains eligible for the benefit supplement and annual adjustments. Neither the Pensioner nor the Spouse is eligible for minimum benefits.
Q: What is the standard survivor benefit to a Spouse?
The survivor benefit pays 50% of a Pensioner's pension amount to the Pensioner's Spouse after the Pensioner's death. Any eligible Children (generally under age 19) share in the remaining 50% of the Pensioner's benefit. This benefit comes at no cost to the Pensioner.
Q: How much would my benefit be reduced?
The monthly benefit is actuarially reduced based on your and your Spouse's ages and life expectancies. Our actuary has provided age-based actuarial tables for calculating the reduction. Generally, the younger your Spouse, the greater the reduction from the unreduced benefit.
Q: When can I choose this option?
You can first choose the J&S annuity option when you set your benefit or at any time after.
If you elect this annuity option after you set your benefit, you must meet a one-year qualifying period. If you die within one year after making the election, the option becomes void and your Spouse is not eligible for the 100% J&S annuity option. In this event, any survivor benefit payable to your Spouse would revert back to the 50% benefit, or special survivor benefit, if eligible and the total amount of the benefit reduction resulting from the selection of the 100% J&S annuity option during this period will be refunded to your qualified survivor.
Q: I am already in DROP. Can I still select the 100% J&S annuity option?
Yes. You can select your benefit option at any time while you are an Active DROP participant, retire or after retirement. All of these options require the one-year qualifying period.
Q: What do I need to consider when electing the 100% J&S annuity option?
The 100% J&S annuity option will always pay you less during your lifetime and, more to your Spouse after your death than the standard benefit provision would pay, except when you have eligible surviving Children. If your Spouse passes away before you, the reduction to your pension benefit will still remain.
Other considerations:
- Does your Spouse have little or no other source of income?
- Will your Spouse be eligible for the special survivor benefit?
- At the time of your death, will you have any Children eligible to receive survivor benefits?
- Do you or your Spouse have health issues that likely would shorten your life span?
- Do you have an impending divorce?
Q: How does the special survivor benefit affect the decision to elect the 100% J&S annuity option?
If eligible, the special survivor benefit would entitle your Qualified Surviving Spouse to a higher survivor benefit than the 50% survivor benefit.
Because the survivor benefit payable under the 100% J&S annuity option may be only marginally higher than what is payable under the special survivor benefit provision (much less of an increase than over the 50% survivor benefit), the required reduction for the 100% annuity J&S option would be relatively small. Consequently, the potential payoff (increased benefit for your Spouse after your death) is not as large as for the standard 50% survivor benefit. A special survivor calculation is available upon request by the member.
Q: What happens if my Spouse dies before me?
This is a risk you take in choosing the 100% J&S annuity option. With the survivor benefit provision, no Surviving Spouse benefit would be paid, but you would continue to receive the reduced benefit.
Q: Can I change my mind after choosing my payment option?
No. After you elect the 100% J&S annuity option, your decision cannot be changed.
Q: If I am interested, what should I do?
Contact a Retirement Counselors at 214.638.3863 or 1.800.638.3861 for an appointment.
We Are Here to Help
We do our best to provide clear, understandable information to you. For more Member or Pensioner information, please contact us via e-mail at info@dpfp.org. You also call the Pension System office at 214.638.3863 or 1.800.638.3861, and ask for a Retirement Counselor.