The FRS Retirement Plan payout options apply to single and married FRS members. There are four payout options which provide retirement income for retired members and their spouse, as joint annuitants; or life only and life with a period certain beneficiary designations. For the joint annuitant payout options, the monthly retirement income amount is determined based on the difference in ages between members and their spouse. For a more detailed review of the FRS Pension Plan payout options consider the following:
Option 1 – Life Only Income Benefit
This payout option provides the highest monthly retirement income for members. There is no survivorship benefit, to elect this option member spouses must consent, in writing.
Option 2 – Life w/10 Year Certain
This payout option provides the second highest monthly retirement income for members. For premature death, there is survivor benefit; for the remainder of the 10 year period. If member lives beyond 10 years after retirement, there is no survivor benefit paid.
Option 3 – 100% Benefit Paid to Survivor
This payout option provides the same monthly retirement income for both joint annuitants, with no benefits after second death. This monthly benefit amount is lower than Option #1.
Option 4 – 2/3 Benefit Paid to Survivor
This payout option provides lower monthly retirement income than Option #1 (higher than Option #3) with two-thirds of the monthly income paid to the surviving joint annuitant, with no benefits after second death.
Final Thoughts
The benefits paid under all four FRS Retirement Plan payout options equal the same actuarial lump sum amount at retirement. In fact, the payout options differ in amounts because of the life expectancy assumptions used for the different payout options. Married and single members might have different survivorship and beneficiary income needs for family members than what is provided by the FRS payout options. FRS Pension Plan members can consider pension income strategies to manage their retirement options through the use of life insurance.
