When a member retires, the member must select a payment option. On average, the payment options are mathematically equal to one another. This means that each option is calculated so that its total value is the same as the value of the other options, if the member and the member’s named beneficiary (if any) who will receive a monthly payment after the member’s death, live their expected life spans.

Initially, the member must decide whether a payment option will be provided to a monthly benefit to a beneficiary after the member's death. If the member does not select such an option, all of the retirement benefits will be used to provide a lifetime monthly payment that stops at the member's death. The benefit amount will differ based on the age of the beneficiary, if any.

The member’s payment option selection is personal and should take into account his or her needs during retirement and the needs of a dependent, if any, after the member’s death. Neither the payment plan selected by a co-worker, nor the one selected by the largest number of retirees, should have any effect on the member’s personal decision.

 

Permanent Decision

Your retirement selection is locked in when the first payment becomes normally due and the first benefit payment date has occurred except under one of the following two conditions:

  • If the member selected an option that provides a monthly benefit to his or her spouse as a beneficiary after the member’s death (Option 2, 3, 6-2 or 6-3) and later becomes divorced from that spouse.
  • If the member is re-hired in a position covered by LGERS and contributes to his or her new account for at least three years.
Tab/Accordion Items

When a member retires with a service retirement benefit, the basic benefit is the maximum allowance.

If the member retires early, the maximum allowance is calculated using the same formula, which is then reduced for early retirement. In either case, the member will receive their allowance for as long as they are living. All monthly payments stop at the member’s death.

  • The member receives a reduced monthly payments for life.
  • After the member’s death, the monthly survivor beneficiary receives the same amount monthly for life.

  • The member receives reduced monthly payments for life which are slightly larger than the payments in Option 2. 
  • After the member’s death, half of the payment continues to the monthly survivor beneficiary for life.

  • The member receives reduced monthly payments for life (a larger reduction than under Option 2). 
  • After the member’s death, the monthly survivor beneficiary receives the same amount monthly for life. 
  • However, if the beneficiary dies before the member, the member’s monthly payments increase to the amount payable under the maximum allowance.

  • The member receives reduced monthly payments for life (a larger reduction than under Option 3). 
  • After the member’s death, half of the payment continues to the monthly survivor beneficiary for life. 
  • However, if the beneficiary dies before the member, the member’s monthly payments are increased to the amount payable under the maximum allowance.

  • The member receives larger monthly payments than they would otherwise be entitled to receive until they become eligible for Social Security at age 62, at which time those monthly payments are considerably reduced. 
     
  • Beginning the month after the month of initial entitlement for Social Security age 62 benefits, the monthly payments will be reduced to an amount that is less than what the member would otherwise be entitled to receive. Nevertheless, the reduced retirement payments after age 62, plus the allowance from the Social Security Administration, should be approximately the same amount as the inflated payment the member received from LGERS before age 62. (The reduction takes place regardless of whether the member has applied for and is receiving Social Security.) 
     
  • The actual amount of the retirement payments both before and after age 62 will be based on the estimate of benefits the member provides to us from the Social Security Administration before retirement.
     
  •  All monthly payments stop at the member’s death

The reduction in monthly retirement payments after age 62 allows LGERS to recover the additional amounts the member received before age 62.

Any percentage increase granted in a member’s retirement benefit before age 62 will be applied to the additional benefit they are receiving at the time. However, when the member reaches age 62, the retirement benefit will be reduced to the original amount promised after age 62 plus the percentage increases (not the dollar amount of increases) granted before age 62.

It is important to note that if a benefit payment option that names a beneficiary is selected, the member should immediately notify the Retirement Systems if that person dies before the member.

NOTE: Under Options 2, 3, 6-2 and 6-3, only one beneficiary may be named to receive a monthly survivor benefit after the member’s death. The survivor beneficiary cannot be changed after retirement except under one of the following circumstances:

  • If a spouse is named as survivor beneficiary at the time of retirement and later the member is divorced from that spouse. 
     
  • If the member returns to employment covered under LGERS and contributes to a new retirement account for at least three years. 
     
  • If the member chose Option 2 or 3 at retirement, and designated their spouse as survivor beneficiary, and this spouse dies before the member, and the member remarries, the member may request to nominate the new spouse as beneficiary within 90 days of remarriage under the same option chosen at retirement. The member should contact our office and a letter outlining the documents we need to make the change will be mailed. This redesignation must be filed within 90 days of remarriage. 

The new benefit will be reduced based on the member’s age and the age of the member’s spouse at the time of the change. The benefit payable will be the benefit received before the death of the previous spouse, additionally reduced to cover the new spouse as beneficiary.

Guaranteed Refund

All payment options include the Guaranteed Refund. This means that if the member and the member’s monthly survivor beneficiary (if any) both die before the total of all monthly payments equals the amount of the member’s contributions and interest, the balance of his or her contributions and interest will be paid in one lump sum to another beneficiary(ies).

The Guaranteed Refund also covers any purchases the member made for additional creditable service after retirement. The member may name one or more beneficiaries for the Guaranteed Refund and may change the beneficiary(ies) as often as he or she likes. However, the beneficiary chosen for the Guaranteed Refund cannot be the same as the monthly survivor beneficiary.