When most people think of FERS survivor benefits – they think of the survivor annuity.

But you should know that there are actually many different survivor benefits in the Federal Employee Retirement System (FERS).

FERS has several items with survivor benefit options or important beneficiary designations that you should know about, including:

• FERS Survivor Annuity or Pension
• FEHB Health Insurance
• FEGLI Life Insurance
• FERS Supplement (in some cases)
• Last FERS Paycheck
• Social Security
• TSP – Thrift Savings Plan account

Let’s cover the primary FERS survivor benefit – the Survivor Annuity:

FERS Survivor Annuity / Pension

When you retire, you have the option of providing a survivor annuity.

This means that when you die, your survivor will continue to receive a portion of your pension every month.

There are three different survivor annuity options you can choose…

1. Full FERS Survivor Annuity – 50% of Your Pension
2. Reduced FERS Survivor Annuity – 25% of Your Pension
3. No Survivor Annuity

If you are married, you will need your spouse’s written permission to choose anything other than the full survivor annuity.

It’s important to make sure you know about all your options before you make your selection.

Let’s take a closer look at each choice:

1. ) Full FERS Survivor Annuity Option

The first thing you need to know about the “full” survivor annuity benefit is only 50% of your regular monthly pension.

Because it is called the “full” survivor benefit – some people think this means their survivor continues to get the full pension – but this is not the case.

If you choose the full FERS survivor annuity option – your survivor will receive 50% of your monthly pension after you pass away.

There is a cost to this benefit. In most cases, it is 10% of your regular monthly FERS pension.

This is a permanent reduction to your FERS pension. The 10% will be deducted from your retirement pension each month until you pass away.

It doesn’t matter if you pass away 1 year, or 100 years after you retire: each month, your pension will be reduced by 10%. When you die, your survivor will receive 50% of your pension for the rest of their life.

Example of Full FERS Survivor Annuity

For easy numbers, let’s say your regular monthly FERS pension was $1,000.

You select the full FERS survivor annuity benefit at retirement, so your pension is reduced by 10%. In our example, your pension would be reduced by $100. You would now receive $900 each month.

When you pass away, your survivor will get 50% of your regular monthly pension – which would be $500 a month.

***If your survivor is someone other than your spouse – your cost may be higher than 10% – but the benefit amount to your survivor would be the same.***

It’s also important to remember the amounts we’re looking at are ‘gross’ numbers.  There will be additional deductions for FEHB, taxes, etc.  Click here to learn more about the 7 Reductions that affect your FERS pension.  

2.) Reduced FERS Survivor Annuity Option

You can also choose to offer a reduced survivor benefit. With this option, your survivor will receive 25% of your monthly pension after you pass away.

In most cases, the cost for this benefit is 5% of your regular FERS pension.

Again – this reduction to your FERS pension is permanent. 5% will be deducted from your retirement pension every month until you pass away. When you die, your survivor will receive 25% of your pension for the rest of their life.

Example of Reduced FERS Survivor Annuity

Let’s continue with our example where your regular monthly FERS pension was $1,000.

At retirement you select the reduced survivor annuity benefit, so your pension is reduced by 5%. In this example, your pension would be reduced by $50. During retirement – you would now receive $950 each month.

When you pass away, your survivor will get 25% of your regular monthly pension – in our example $250 a month.

***If your survivor is someone other than your spouse – your cost may be higher than 5% – but the benefit amount to your survivor would be the same.***

And again, we’re just talking about “gross” numbers here for this example.  The amount you and your survivor receive will be reduced by FEHB premiums, taxes, etc.

3.) Choosing No FERS Survivor Benefit

You also have the option not to choose any survivor annuity. If you are married, you will need your spouse’s permission to make this choice.

I generally don’t recommend people choose No Survivor Annuity – unless you are in a unique situation where you don’t have a survivor.

But for most people, it makes sense to consider a Full or Reduced FERS Survivor Annuity Benefit.

Even if your spouse doesn’t need the money – there are important reasons to consider offering a survivor benefit.

What If My Spouse Doesn’t *Need* the Money?

Even if you don’t think your spouse will need the money – you should still consider offering a survivor benefit.

The biggest reason is… Health Insurance.

If your spouse is not receiving a survivor annuity benefit – they will not be eligible for FEHB health insurance after you die.

Even if your spouse is on your FEHB plan during retirement – once you die – if your spouse is not receiving a survivor annuity they will lose their health insurance.

For this reason – I recommend that most Federal Employees consider offering *at least* the reduced survivor annuity.  Even though a reduced annuity may not be enough to cover the entire cost of FEHB premiums your spouse will have to pay – the reduced FERS survivor benefit option at least keeps their foot in the door with FEHB.

Even if your spouse won’t need the money – having health insurance will still be very important. Especially when you consider the cost of getting private insurance.