Death Prior to Retirement

When you have five years of earned service credit, you are vested in the defined benefit plan. If you die before you retire, the defined benefit plan provides the beneficiary you named on your Beneficiary Designation Form 42 an option for a lump sum benefit or to elect to receive a lifetime benefit under Option B. However, if you name as your beneficiary either (i) more than one person, or (ii) a trust, or (iii) designate someone who is not your spouse and who is more than ten years younger than you are, the beneficiary(ies) receive a lump sum benefit. Prior to retirement, you may change your beneficiary at any time by submitting a new Beneficiary Designation - Form 42.

If an ERB member who chose Option B dies prior to retirement, the benefit is computed as of the first day of the month following the date of death. The beneficiary may elect to begin receiving monthly benefits the month after the member’s death, or benefits may be deferred up to the deceased member’s 60th birthday.

If a deceased member under age 60 had less than 25 years of service, deferring the benefit until that member’s 60th birthday provides a larger benefit payment to the beneficiary because survivor benefits are also subject to the age related reduction of benefits. See “Retirement Eligibility: Age & Benefits.”

If you are the beneficiary of a member whose employment began prior toJuly 1, 2010, did not withdraw contributions, and died at age 42 with 15years of earned service, the survivor benefit is reduced by 2.4% for each full year under age 60 (0.6% for each ¼ year or portion thereof) and 7.2% (1.8% for each ¼ year or portion thereof) for each year under age 55: (5 years x 2.4%) + (13 years x 7.2%) = 12% + 93.6%, or 105.6% penalty The deduction exceeds 100% so the beneficiary receives no payment. If the beneficiary waits until the deceased member’s 50th birthday: (5 years x 2.4%) + (5 years x 7.2%) = 12% + 36%, or 48% penalty If the beneficiary defers payment until the deceased member’s 60th birthday, there is no penalty, and the monthly benefit is based on the “FAS x years of service credit x .0235” formula.

When a member dies his or her beneficiary has the right to withdraw the deceased member’s contributions plus interest in a lump sum payment in lieu of a monthly payment. If an ERB member chooses not to participate in Option B and dies prior to retirement, his or her beneficiary, or estate, will receive the member’s contributions plus interest.