CalPERS Retirement Option Death Benefits: What Survivors Get Under Each Option

The retirement option a CalPERS member chose years ago determines everything about what their survivors receive after death. Some options guarantee a lifetime monthly allowance to a named beneficiary. Others pay nothing beyond a one-time lump sum. If you're trying to figure out what your family member's pension choice means for you, here's how each option works.

The Unmodified Allowance

The Unmodified Allowance pays the highest monthly amount to the retiree during their lifetime, but it provides no ongoing monthly payment to a named beneficiary after death. The pension stops on the date of death.

That doesn't necessarily mean survivors get nothing. If the retiree's employer contracted for Survivor Continuance under Government Code § 21624, an eligible spouse or registered domestic partner may receive 25% or 50% of the Unmodified Allowance as an ongoing monthly payment. The percentage depends on whether the retiree's position was covered by Social Security (25%) or not (50%).

The catch: to qualify, the marriage or domestic partnership must have been registered at least one full year before the service retirement date and must have continued uninterrupted until the retiree's death.

Option 1: Return of Remaining Contributions

Option 1 reduces the retiree's monthly allowance slightly during their lifetime. After death, any unused portion of the retiree's accumulated member contributions is paid as a one-time lump sum to designated beneficiaries.

The practical problem is that member contributions are typically depleted within 10 to 12 years of retirement. If a retiree lived 15 years past retirement, there may be nothing left to pay out under Option 1. The surviving spouse receives no ongoing monthly allowance from this option alone, though Survivor Continuance may still apply if the employer contracted for it.

Option 2 and Option 2W: Full Continuation

Option 2 provides a reduced monthly allowance to the retiree during their lifetime. After death, 100% of the option portion of the monthly allowance continues for the lifetime of the named beneficiary. This is the most common choice for retirees who want to protect a spouse's income.

Option 2W adds a "pop-up" feature: if the named beneficiary dies before the retiree, the retiree's monthly payment increases back to the higher Unmodified Allowance amount for the rest of their life. The monthly reduction during the retiree's lifetime is slightly larger than standard Option 2 to fund this pop-up protection.

For survivors, Option 2/2W is often the most valuable outcome. The named beneficiary receives a monthly check for life, and the amount is the same as what the retiree was receiving under the option calculation.

Option 3: Half Continuation

Option 3 works like Option 2 but pays 50% of the option portion of the monthly allowance to the named lifetime beneficiary after the retiree's death. The retiree takes a smaller reduction during their lifetime compared to Option 2, but the survivor receives half as much.

Option 3 also includes the pop-up provision. If the named beneficiary predeceases the retiree, the retiree's monthly payment pops up to the Unmodified Allowance level.

Option 4: Custom Split

Option 4 lets retirees specify fixed dollar amounts or percentages for multiple lifetime beneficiaries, subject to CalPERS actuarial approval. This option is sometimes required when a court-ordered Domestic Relations Order (DRO) directs that a former spouse receive a share of the retirement benefit.

After death, each named beneficiary receives whatever dollar amount or percentage was specified in the Option 4 election. The actuarial reduction during the retiree's lifetime depends on how many beneficiaries are named and how the benefit is split.

What Every Survivor Also Receives

Regardless of which option the retiree chose, survivors may also receive:

• Lump Sum Retired Death Benefit: A one-time payment of $500 to $5,000, depending on the employer's contract with CalPERS. If the retiree had service credit with multiple CalPERS employers, the highest contracted amount applies.
• Prorated final month payment: CalPERS calculates a prorated allowance for the days in the month of death that the retiree was alive, paid to the designated prorated allowance beneficiary or, if none was designated, to the statutory beneficiary.

Finding Out Which Option Was Elected

If you don't know which retirement option your family member chose, CalPERS can tell you. Call 888-225-7377 or log into myCalPERS if you have authorized access. The original Service Retirement Election Application (Form CalPERS-1206) recorded the option choice, and CalPERS keeps it on file permanently.

Understanding the elected option is the first step in knowing what you're entitled to claim. Our CalPERS Survivor Benefits Guide walks through the complete claim process for each option type, including the forms, documents, and tax elections you'll need to submit.

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