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SERS outlines "level income" option that temporarily raises pension before Social Security age
Summary
The webinar explained the level income option for members who paid into Social Security, where SERS temporarily increases pension payments before the retiree reaches Social Security age and reduces the pension later; the choice is irrevocable and requires a Social Security benefit estimate.
SERS presenter (Staff member, State Employees' Retirement System) explained the level income option, a choice that can increase a retiree's monthly SERS payment before the member reaches the Social Security age they select and that results in a pension reduction once Social Security eligibility begins.
Why it matters: Members who retire before their Social Security eligibility age may use level income to smooth household income in early retirement, but the election is irrevocable and requires a Social Security benefit estimate (Personal Earnings and Benefit Statement, or PEAP) to be provided at retirement.
Under level income, SERS pays the retiree's regular pension plus an additional amount based on an estimate of the member's future Social Security benefit until the elected Social Security age; at that point SERS permanently reduces the pension by the estimated Social Security amount. The presenter gave examples: a hypothetical retiree with a $2,000 monthly SERS pension retiring at 55 who elects level income at age 62 would receive an additional $536 per month from SERS until age 62, after which SERS reduces the monthly pension by the Social Security estimate (in the example $1,000) and the retiree begins collecting Social Security, keeping household income relatively steady.
The webinar stressed that members must obtain a signed and dated Social Security benefit estimate (PEAP) within approximately six months of retirement and include it with the retirement packet to qualify for level income. The presenter also said level income is not early access to Social Security benefits; SERS funds the temporary increase and the election is irrevocable. Members who choose level income remain responsible for applying for Social Security in a timely manner when they become eligible.
Attendees were directed to SERS online calculators and Social Security's website to request the PEAP and to sign and date printed statements before submission.
