TRS Illinois Reversionary Annuity: How It Works After a Retiree Dies

A Reversionary Annuity Is an Extra Survivor Benefit — Purchased at Retirement

When a TRS Illinois member retires, they have the option to accept a permanently reduced lifetime pension in exchange for providing an additional monthly annuity to a designated dependent beneficiary upon the retiree's death. This is a reversionary annuity, and it sits on top of whatever standard survivor benefits the family would receive.

The election must be completed on the retirement application before the retirement date takes effect. Once made, it cannot be changed or canceled — it's irrevocable.

How It Stacks With Standard Survivor Benefits

A reversionary annuity is separate from the standard monthly survivor annuity (50% for Tier 1, 66⅔% for Tier 2). When a retiree who elected a reversionary annuity dies, the designated beneficiary receives both:

• The standard monthly survivor annuity based on the retiree's pension at death
• The reversionary annuity payment specified at retirement

The trade-off is that the retiree received a lower monthly pension during their lifetime. The reduction is actuarially calculated at retirement based on the retiree's and beneficiary's ages.

What Happens If the Beneficiary Dies First

If the person named as the reversionary annuity beneficiary predeceases the retiree, the retiree's monthly pension reverts to the full, unreduced amount. This "pop-up" takes effect on the first day of the month following TRS's receipt of the beneficiary's certified death certificate.

TRS does not issue retroactive adjustments for the period between the beneficiary's death and when TRS is notified. If the beneficiary died in March but TRS doesn't receive the death certificate until June, the pension increase begins July 1 — the three months of continued reduction are not refunded.

The Contribution Refund Trade-Off

Electing a reversionary annuity eliminates any remaining accumulated contribution balance that would otherwise be refundable upon the retiree's death. In other words, the contribution refund component of the death benefit — which can be substantial for retirees who haven't drawn many years of pension — goes to zero.

For families, this means the reversionary annuity decision has already been made. You can't change it after death. What you need to know is whether one was elected (check the retirement paperwork or ask TRS directly) and what the monthly amount will be.

Our TRS Illinois Survivor Benefits Guide explains how reversionary annuities interact with the lump-sum death benefit, the standard survivor annuity election, and TRIP health insurance eligibility.

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