Survivor Benefits for Deferred Members

If a relief association member dies while in deferred status, the association must look to the survivor benefit provisions of its bylaws to determine if the member’s survivors are eligible for a distribution from the association and, if so, how the survivor benefit will be calculated. If a member dies while in deferred status, the member is no longer deferred and no deferred service pension is payable. The only distribution authorized in these circumstances is a survivor benefit, and only if allowed by the bylaws. 

A relief association wishing to provide payment to the surviving spouse, surviving children, or designed beneficiary 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 our Sample Bylaw Guides that can be used as a reference.

Published last in the September 2015 Pension Newsletter