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Understand your FERS survivor benefit options. Learn about the FERS survivor annuity for federal employees and ensure loved ones are protected, including dependents with a disability.
Federal Employee Retirement System Survivor Benefits: Guide for FERS Survivor Annuity Options
This article explores aspects of FERS survivor benefits, the various options available to federal employees and their families, and how to ensure that your family is protected in the event of your passing.
Understanding Survivor Benefits and Options
Survivor elections within the FERS retirement system determine the type and level of survivor benefit your spouse and eligible dependents will receive, shaping their financial future and influencing their access to essential benefits like health insurance. Choosing the right survivor annuity option requires careful consideration of your family’s unique needs and circumstances.
Impact on Family Financial Security
The choices you make regarding survivor benefits significantly affect your family’s financial security. Selecting a lower level of survivor annuity increases your immediate annuity benefit during your lifetime but could leave your surviving spouse and dependents with insufficient resources to maintain their standard of living after your death. Conversely, electing a higher level of survivor benefit provides greater financial protection for your family, ensuring they receive a steady income stream through the monthly survivorship annuity, but it will reduce your own retirement income while you are still alive.
Learn more about your federal employee retirement benefits – Attend an Online FERS Seminar.
Key Areas of Focus: Surviving Spouse and Dependents
Two key areas demand your attention when considering FERS survivor benefits: spousal survivor benefit options and lifetime benefits for disabled children. Spousal benefits offer varying levels of financial support to your surviving spouse, while protections for disabled children ensure they receive ongoing support if they are incapable of self-support. Each option, including the full survivor benefit and partial survivor benefit, and the implications of foregoing survivor benefits altogether, which generally requires spousal consent, should be fully understood before committing to one, as the choice is irrevocable once you’ve submitted your retirement application to OPM.
Federal Employee Retirement System: Survivor Annuity Options
Unlike FEGLI benefits, which are paid out as a lump sum upon death, CSRS or FERS pensions where survivor benefits were selected will provide a spousal benefit as a monthly annuity. If there is a living ex-spouse, depending on the Federal Employee divorce court order, a benefit may be payable, providing a former spouse a survivor annuity and reducing the annuity for a spouse that was still married upon the federal retiree’s passing. If the court order explicitly instructs it, a federal retiree may have to provide the survivor benefit to the former spouse and can’t elect to have zero survivorship benefit payable upon death.
Basic Employee Death Benefit (BEDB)
If a federal employees dies, and the death was accidental, a Basic Employee Death Benefit is payable to the surviving family members. The benefit is lump‑sum payment plus a percentage of the employee’s salary to the surviving spouse, and the benefit is funded through the federal service retirement and disability fund. In addition to this lump‑sum benefit, FERS spousal survivor annuity payments might also be payable if the employee had at least 10 years of creditable service, including 18 months of civilian service, at the time of death. In that case, the widow or widower can receive a recurring survivor annuity based on the employee’s earned pension, separate from the BEDB.
Full Survivor Annuity (50%)
The full survivor annuity under FERS offers the surviving spouse 50% of the federal employee’s FERS annuity for the remainder of their life. In exchange for this substantial survivor benefit, the federal employee’s annuity benefit is permanently reduced by 10%. This election ensures a significant and ongoing income stream for the spouse, providing financial security and stability after the federal employee’s death.
Partial Survivor Annuity (25%)
The partial survivor annuity provides the surviving spouse with 25% of the federal employee’s FERS annuity for life. This option reduces the federal employee’s annuity benefit by 5%, making it a less expensive choice compared to the full survivor annuity. The partial survivor benefit offers a balance between providing financial protection for the surviving spouse and maintaining a higher annuity for the federal employee during their retirement.
No Survivor Annuity Election
Electing no survivor annuity means that the surviving spouse will not receive any ongoing annuity payments from the federal employee’s FERS annuity benefit after their death, and it requires notarized spousal consent. While this option results in no reduction to the federal employee’s retirement annuity, it also means the surviving spouse loses access to a guaranteed income stream and other benefits. An unreduced annuity is received by the retiree when this option is chosen.
Survivor Annuity and FEHB Eligibility
The election of a FERS survivor benefit is intrinsically linked to the surviving spouse’s eligibility to continue Federal Employees Health Benefits (FEHB) coverage. FEHB regulations require that a surviving spouse receive FERS or CSRS survivor benefits in order to maintain their health insurance coverage under the federal plan. This is a major reason why feds should approach pension max strategies with caution and not rush to replace FERS survivor benefits with a private life insurance plan when submitting their OPM application for retirement benefits. However, when it comes to disabled or special needs dependent, it might be possible to retain eligibility for health insurance and receive a survivor’s pension even if they elected no survivor’s benefit upon retiring from the federal government.
Death Benefits for Children in FERS: Monthly Survivor Annuity
Under FERS, children of deceased federal employees are eligible for survivor benefits if they are elected. These monthly survivor benefit payments are designed to provide financial support to dependent children. Normally, the death benefits for children under FERS end when they reach age 18. However, there’s an exception: if the child is a full-time student, the benefits can continue until age 22. Furthermore, for dependents with special needs, there is an automatic survivor’s benefit even if no spousal survivorship is elected, meaning the dependent could continue being eligible for FEHB. The benefit is automatic in the sense that you don’t need to elect a survivor benefit for your current spouse, but it does not start automatically, it must be applied for after the federal retiree dies and the the benefit begins on the date that the application is approved.
Lifetime Survivor Annuity Benefit for Disabled Children
FERS provides a lifetime survivor annuity benefit for disabled children if:
- the child’s disability began before age 18,
- the child is unmarried,
- the child is incapable of self-support.
These requirements ensure that ongoing support is provided to those who are unable to care for themselves due to a disability, and this offers peace of mind for any federal employee making retirement contributions. Higher payments are provided if there is no surviving parent.
Required Documentation for Application for Death Benefits
To apply for the disabled child benefit, OPM requires comprehensive documentation. This includes medical certification detailing the nature and extent of the disability, as well as information about the child’s education, employment history, and living situation – including marital status. Social Security disability determinations made before the child turned 18 are accepted as proof of disability. All of this information is taken into account to see if the child warrants a survivor annuity benefit.
Social Security, and COLA Adjustments
These monthly survivor annuity amounts are adjusted annually for Cost of Living Adjustments (COLA). This COLA adjustment ensures that the purchasing power of the survivor annuity benefits keeps pace with inflation, helping to maintain the child’s standard of living. The amount of child’s insurance benefits under FERS might be offset or fully reduced if the child receives Social Security benefits. This makes the lifetime benefit from FERS practically negligible in most cases, other than the continued eligibility for an FEHB health plan.
Planning Considerations for Federal Employees
When planning for retirement, aligning survivor annuity elections with your family’s needs is paramount. Consider your spouse’s financial resources, health insurance requirements, and long-term care plans. A comprehensive evaluation will help determine whether a full survivor benefit or a partial survivor annuity is more suitable.
Schedule a meeting with a Fed-Expert Retirement Planner to discuss your choices.
Coordinating with Social Security and Trusts
Families with a disabled child must coordinate FERS survivor annuity benefits with other resources such as Social Security and special needs trusts. Understanding how these various benefits interact is essential for maximizing financial support and ensuring that the disabled child’s needs are met. The amount of child’s insurance benefits received from Social Security may impact the survivor annuity amount paid under FERS. Careful planning ensures the long-term well-being of your spouse and children and their benefits.
Seeking Professional Guidance
A qualified financial advisor with expertise in federal employee benefits can provide personalized advice tailored to your specific circumstances. They can help you evaluate your options, understand the tax implications, and make informed decisions that align with your overall financial goals. Professional guidance ensures that you make the best choices for your family’s future, providing peace of mind and financial security.
