It’s Valentines week! This may be the reminder that you need to go and get flowers or chocolate for that special someone. However, with all of the love in the air this week, I thought it would be a good time to talk about the LAGERS benefits that are available to the ones you love.
LAGERS has benefits that your loved ones may be eligible for if you pass away while you are still working. If you are vested and were married for at least two years prior to the death, your spouse will be able to receive a monthly lifetime benefit from LAGERS. The two year marriage requirement is waived if your death is caused by an accident or is work-related. Your spouse will receive the Option A amount which is the highest monthly benefit a beneficiary can receive from LAGERS, equivalent to approximately 60-64% of your benefit. When the death is work-related, you don’t need to be vested and LAGERS will extend additional service credit to your benefit as if you worked until age 60. Read more about Disability & Survivor Benefits – Click Here.
Don’t have a spouse? There is a scenario where a beneficiary may still receive a payment from LAGERS. If you contributed to the LAGERS system during your career and did not receive a refund of those contributions at any time, upon your death, the beneficiary listed with LAGERS will receive your employee contribution balance plus the interest earned in a lump sum payment. If you don’t have a living beneficiary listed, LAGERS will pay your employee contributions to the your estate. So, having an up-to date beneficiary is incredibly important. You can update your beneficiaries and much more from the myLAGERS portal – Click Here.
Once you retire, it is entirely up to you whether or not your spouse or loved ones will receive a monthly benefit. You will have the freedom to choose one of the options explained below upon your retirement. Keep in mind that this is not a one-size-fits-all decision.(Read blog here).
Life Option: This option is pretty straightforward. It is the option that pays the highest monthly benefit to you. Upon your death, however, there is no monthly benefit payable. The only thing that could be payable is your remaining employee contribution balance (if any).
Option A & B: These options are better known as ‘joint-survivor’ options. With both of these options, you can choose to have your monthly benefit reduced in exchange for providing a beneficiary with a lifetime benefit after you pass away. The difference between the two options is the amount the spouse and member receive; Option A pays the spouse more than Option B.
For both of the options, the beneficiary must be a spouse of at least two years or a person age 40 or older who is more than half supported by you for two or more years. Also, once you begin your monthly benefit under these options, the spouse designation cannot ever be changed in the future. Also, if both you and your spouse pass away and there are still employee contributions in the system, they will be paid to your beneficiary of record or estate.
Option C: The common name given to this benefit is Life (10 Year Certain) Plan. This is misleading because you will receive a reduced monthly benefit for the rest of your life under Option C not for just 10 years. Option C pays a beneficiary a monthly benefit if you pass away before a total of 120 payments are paid. The beneficiary will receive the remaining monthly payments until a total of 120 payments have been made to you and the beneficiary. Also, Option C allows someone other than a spouse to be listed as your beneficiary and your beneficiary(s) can be changed throughout retirement.
Partial Lump Sum (PLUS): The Partial Lump Sum can be added to any of the above payment options and will pay you a lump sum equivalent to 24 Life Option payments. This will reduce your monthly benefit, but will allow you to use this lump sum upfront. For more information about whether the PLUS if right for you – Check out this blog.
So, you could tell your spouse that you have these benefits available for her and that’s why you didn’t get her anything for Valentine’s Day, but I don’t think that will go well :). Instead, you have the peace of mind knowing that if something were to happen to you now or after you retire, your LAGERS benefit will be there. As for this week, you may just want to bite the bullet and buy some chocolate.