Pension Payment Options
The Pension Fund offers multiple payment options from which you must choose one. The number of options depends on your marital status and pension type. It is important to select the option that works best for you and your family or financial situation.
Items you may want to consider when selecting the best option for you include: your age, your spouse’s age, your health, your spouse’s health, life insurance policies, and other death benefits available. Once you make your selection and begin receiving your benefit, you are not allowed to change the option which you elected.
This payment option provides a monthly benefits for your life. If you die before receiving 60 monthly payments (5 years), your beneficiary will receive the remainder of the 60 monthly payments. If you die after receiving 60 or more monthly payments, no benefits are paid to your beneficiary. If you are not married, your benefits are automatically paid in this way.
Example: A member retires with this option with an effective date of January 2007 with a monthly benefits of $1000. If he dies after December 1, 2011, nothing will be payable to his beneficiary because the 60 monthly payments would have been complete. However, if he dies prior to December 1, 2011, his beneficiary will receive $1000 per month through December 2011 – when the benefit will stop.
This payment option provides an actuarially reduced monthly benefit for your life. The benefit is reduced because it is expected to be paid over two lifetimes – yours and your spouse’s. Upon your death, your spouse will receive a monthly benefit equal to 50% of the benefit you were receiving before death.
Example: A member retires with this option and is receiving a monthly benefit of $1,000. When the member dies, his/her spouse would then start receiving $500 per month. This would be paid to the spouse for the remainder of their lifetime.
Under this option, if your spouse dies before you, the survivor benefit is canceled and your benefit is restored to its unreduced amount for the remainder of your lifetime. If you get divorced after this option becomes effective, the survivor benefit remains in place for your ex-spouse, unless and until it is waived or voided pursuant to an appropriate Qualified Domestic Relations Order (QDRO). The survivor benefit will be canceled upon receipt by the Pension Fund of such an order, and your benefit will be restored to its original amount for the remainder of your lifetime. If you are married, your benefit is automatically paid in this way unless you and your spouse choose another payment method. To choose another payment option, your spouse must sign a notarized consent.
This payment method is paid in the same manner as the 50% Option, except, upon your death, your spouse will receive a monthly benefit equal to 75% of the benefit you were receiving before death. Additionally, the initial reduction for the spouse’s option will be larger than the reduction for the 50% option. This option is not available for either the Occupational or the Permanent and Total Disability Pension Benefits.
This payment method is paid in the same manner as the 50% Option, except, upon your death, your spouse will receive a monthly benefit equal to 100% of the benefit you were receiving before death. Additionally, the initial reduction for the spouse’s option will be larger than the reduction for the 75% option. This option is not available for either the Occupational or the Permanent and Total Disability Pension Benefits.
This option is only available for members who have at least 1/4 unforfeited Pension Credit prior to January 1, 2018.
If you retire before you reach your full/normal retirement age for Social Security (SS) retirement benefits, you can choose this payment method in conjunction with one of the other previously explained options. If you elect this option, you will receive an actuarially increased monthly pension benefit from the LDC&C Pension Fund before you reach your SS full retirement age (age 65-67 depending on your birth date) and a reduced monthly pension benefit after you are SS full retirement age. Your actuarially increased pension benefit will be reduced by your estimated SS full retirement benefit amount at that time.
In theory, this option allows your combined monthly retirement income from SS and the Pension Fund to remain fairly level throughout your retirement years. The monthly pension amount for this option is based on the assumption that you will begin to receive your SS retirement at SS full retirement age, not earlier or later. Additionally, your pension benefit will not be adjusted at a later time if your SS benefit is either higher or lower than the estimate used in the original calculation. This option is not available for either the Occupational or the Permanent and Total Disability Pension Benefits.
Example: A member is eligible to receive a monthly pension benefit of $500.00 and expects to receive $400 per month from Social Security. The plan will pay the member $733 per month until his Social Security benefits begin, and then reduce his benefit to $333 per month for the rest of his life. This way, his combined retirement income, including Social Security, is $733 per month throughout his retirement years.
Very few members are eligible for the lump sum payment option. Generally, only members with relatively small benefits are eligible for lump sum payments. When you retire, you will receive your pension in the form of a monthly benefit payment unless:
- The actuarial value of your total benefit is less than $5,000; it is automatically paid to you in a one-time lump sum payment.
- Or, the amount of your monthly benefit is less than $200; you may choose to receive your total benefit in a one-time lump sum payment.