SERS explains survivor annuity options and Social Security offset at retirement

SERS presenter (Staff member, State Employees' Retirement System) described survivor benefit options available at retirement and how Social Security survivor benefits can reduce the SERS survivor annuity, explaining the Social Security offset removal election and the separate reversionary annuity choice.

Why it matters: These elections change both the retiree's initial pension payment and the income a surviving spouse or designated dependent may receive; some elections are irrevocable and affect long-term household income and survivor payments.

The presenter explained the Social Security offset: SERS will compare the surviving spouse's Social Security benefit to the survivor annuity that would otherwise be paid. Members may elect to "participate" in Social Security offset removal at retirement by accepting a 3.825% reduction to their pension to guarantee a surviving spouse 50% of the retiree's pension at the time of death. If a member chooses not to elect removal, SERS will make the comparison at the time of death and apply any applicable offset at that time. The presenter emphasized that no offset applies if neither the member nor the spouse has paid into Social Security or if the spouse's Social Security benefit already exceeds the survivor annuity amount.

The webinar included numeric examples demonstrating how the offset operates across ages and Social Security entitlements and how reductions change over time as survivors gain their own Social Security eligibility. The presenter said all monthly annuity survivor benefits paid to a qualifying spouse are reduced by half of any survivor benefits payable through the Social Security Administration, and that SERS will not reduce the SERS benefit by more than 50%.

The presenter also described the reversionary annuity option, which is a separate, irrevocable election that permanently reduces a retiree's pension to provide lifetime income to a designated dependent. The reversionary option is elected by a separate form (not included in the packet) and is available in 10% increments up to 100%. The webinar provided examples: a 100% reversionary election produced a stated reduction to the retiree's monthly pension and paid the full pre-death pension amount as a reversionary benefit to the designated dependent, while SERS survivor benefits (subject to the Social Security offset rules and annual 3% cost-of-living adjustments) remain separate and may also pay to a qualifying spouse.

The presenter warned that both the Social Security offset removal election and the reversionary annuity option are irrevocable once chosen and that the reversionary amount does not increase with COLAs while survivor benefits do receive 3% annual increases.

Attendees were directed to include the relevant elections on the retirement application and to contact SERS for the separate reversionary form if they wish to elect that option.