As a member of the Teachers’ Retirement System (TRS) or the Board of Education Retirement System (BERS), you have options for the distribution of your retirement allowance under the Qualified Pension Plan. In each case, you would receive a monthly retirement allowance payment for your lifetime, but the amount would differ.

As with other major financial decisions, the choice depends on your situation and your finances.

Retirees who select “maximum retirement allowance” receive the maximum amount of money a retiree is entitled to collect on a monthly basis for the rest of their life. That choice makes no provision for dependents, heirs or beneficiaries.

Retirees who wish to provide financial security to survivors may choose a reduced monthly payment in exchange for a continuing benefit to beneficiaries after the retiree’s death. These retirees have two options:

• The continuing payment option protects two people — the retiree and a single beneficiary — until both die.
• The term-certain option guarantees a certain number of retirement payments to one or more beneficiaries.

Continuing payment option

In the event of a retiree’s death, the continuing payment option provides a benefit to the beneficiary for the rest of their life. This option is generally, but not necessarily, used for a spouse/partner or a dependent. The cost of this option is based on two life expectancies, so the name of the beneficiary cannot be changed after retirement. You get to choose how much of a benefit your survivor will receive. But the larger the benefit to the beneficiary, the higher the cost of the option.

Please note: You can buy a supplemental benefit to this option called a continuing payment option with a pop-up provision. This supplemental benefit protects the retiree in the event the beneficiary passes away first. The provision allows the retirement allowance to rise to the maximum benefit for the remainder of the retiree’s life.

Term-certain option

The term-certain option provides the retiree with a reduced monthly retirement allowance for a guaranteed number of payments. The retiree may choose either five years (60 months) or 10 years (120 months). If the retiree dies before the term is up, the beneficiary collects the money for the remainder of the 60-month or 120-month period. The cost of this option is based on the age of the retiree and the length of the guarantee. The beneficiary may be of any age and the name of the beneficiary may be changed at any time. More than one beneficiary may be included.

Your UFT pension consultant will discuss the choices with you at your final pension consultation, but the final decision is personal. Your decision at retirement to take the maximum retirement allowance or one of the options is irrevocable.

Whichever choice you make, all come with the benefit of the fractional payment for the month in which you die and the post-retirement death benefit, if applicable, payable to your beneficiary on file.

Final pension consultation

If you plan to retire at the end of this school year, you should have a final UFT pension consultation. To schedule an appointment, call 212-331-6311. pointment.

This column is compiled by Tom Brown, David Kazansky and Victoria Lee, teacher-members of the NYC Teachers’ Retirement Board.