Survivor Benefits for Deferred Members
If a member who is deferred dies before being paid the member’s earned deferred service pension amount, the relief association must look to the survivor benefit provisions of its bylaws to determine if the member’s survivors are eligible for a distribution. Eligibility requirements defined in statute for the payment of a deferred service pension are not able to be met when a member dies while in deferred status. The only type of distribution authorized in these circumstances is a survivor benefit, and only if expressly allowed by the relief association’s bylaws.
While most relief associations authorize survivor benefit payments on behalf of active members, some relief association bylaws do not extend this payment authority to deferred members, too. A relief association wishing to provide payment to the surviving spouse, surviving children, designed beneficiary, or estate of a deferred member must specifically authorize this type of survivor benefit payment in its bylaws.
For a defined-benefit lump-sum plan, a monthly plan, or a monthly/lump-sum combination plan, survivor benefits paid on behalf of a deferred member can be calculated in the same manner as for active-member survivor benefits, or the survivor benefit can be of a lesser amount. Many relief associations, for example, pay a deferred member’s accrued benefit (i.e., the member’s vested benefit) as the survivor benefit.
For a defined-contribution plan, survivor benefits paid on behalf of a deferred member must equal the vested amount of the deceased member’s individual account.
Several optional survivor benefit provisions are included in the OSA’s Sample Bylaw Guides that can be used as a reference.
Published last in the August 2022 Pension Newsletter