You must choose your payment option when you apply for your pension. After your retirement effective date, you will not be able to change your option or your designated survivor pension beneficiary. (However, if you marry after your pension begins, you may be able to name your new spouse as a pension beneficiary under certain conditions. Your pension is a lifetime benefit and it cannot be cashed out once you retire.
Read carefully, ask questions, estimate under various scenarios, talk with your family - but do it before you sign your application papers.
Click on a topic below for more information:
Remember, all pension calculations begin by figuring your straight life amount. Your straight life amount is then adjusted, depending on which plan or option you are choosing.
- Full Retirement / Straight Life
If you choose this payment option, you receive the maximum monthly benefit payable throughout your lifetime. No ongoing pension payments or insurances are provided to your survivors.
Calculate your annual straight life pension using your pension formula. Divide the product by 12 to calculate your monthly straight life benefit.
Every calculation for other payment options (survivor, equated, early reduced) begins with a calculation of your straight life pension.
Additional notes about the straight life option.
- If you are married and choose a straight life option, your spouse must waive his or her right to your pension by signing the Pension Election and Spousal Waiver (R0869C) form in the presence of a notary public.
- If you have the Premium Subsidy benefit, your spouse and other eligible dependents can enroll in the plan's insurances during your lifetime whether you choose the straight life or a survivor option
- If you have the Personal Healthcare Fund, you are not eligible for subsidized insurances through the retirement system. You, your spouse, and your dependents may enroll in the retiree health plan if you enroll immediately when you retire, but you will be responsible for the entire premium. If you disenroll from the plan at any time, you, your spouse, and your dependents will not be able to re-enroll.
- No monthly pension or insurances will continue to any beneficiary upon your death if you choose a straight life option. However, if there are any DB pension contributions remaining on account when you die, your beneficiary designated at retirement receives the balance in a lump sum payment.
- If you marry after retirement you may be able to switch to a survivor option. Certain conditions and restrictions apply.
- Survivor Options
If you elect a survivor option when you apply for retirement, you receive a reduced pension throughout your lifetime; however, upon your death your pension continues for the lifetime of your survivor pension beneficiary. You can name your spouse, child (including your adopted child), sibling, or parent as your survivor pension beneficiary.
If you marry after your pension begins and you name your new spouse as a survivor pension beneficiary, upon your death, the pension payment will be paid for your spouse's lifetime provided your death does not occur within 12 months of naming your new spouse as a survivor pension beneficiary. Click here for more information.
If you elect the 100 percent survivor option, upon your death your survivor will receive the same monthly benefit you received (before any tax, insurance premium, or other deductions). If you elect the 75 percent option, your survivor receives 75 percent of your pension amount; with the 50 percent option your survivor will be paid half of your monthly pension payment.
The monthly pension amount for a survivor option is based on actuarial tables that factor in life expectancies for you and your beneficiary. These tables can be found in Retirement Readiness - A Two-Year Countdown. (The Estimate Pension feature in miAccount has the full actuarial table.)
Note: Actuarial tables only provide estimates. Percentages are rounded and are subject to change.
Additional notes about the survivor options.
- If you're married and name someone other than your spouse as your beneficiary, or you elect any option other than the 100 percent survivor option, your spouse must waive his or her right to your pension by signing the Pension Election and Spousal Waiver (R0869C) form in the presence of a notary public.
- If you elect one of the survivor options but your pension beneficiary dies before you, your pension payment will increase to the straight life amount (either full or early reduced).
- Survivor pension payments are partially funded by your DB pension contributions, which are always paid out first. That DB pension contribution total is usually depleted in fewer than two years after retirement.
- You are not able to change your option or your designated survivor pension beneficiary after your retirement effective date. However, if you marry after your pension begins, you may be able to name your new spouse as a pension beneficiary under certain conditions.
- Upon your death, if you have the Premium Subsidy benefit, insurance benefits continue for your designated survivor pension beneficiary. Your eligible dependents who were covered at the time of your death may also continue to receive insurance benefits if you have chosen the survivor option and designated your spouse as your survivor pension beneficiary. These benefits continue at the same level as when you were alive, unless you marry after retirement and name your new spouse as beneficiary after your pension begins. If you name a new spouse after your pension begins, upon your death, he or she can enroll in insurances but must pay the entire premium.
- Upon your death, if you have the Personal Healthcare Fund, any eligible beneficiaries and dependents who were already enrolled in insurances at the time of your death may continue to be enrolled in insurances but they will continue to be responsible for the entire premium. If they disenroll from the plan at any time, they will not be able to re-enroll.
- If you get divorced after your pension begins, and your spouse is your pension beneficiary, the court could order that your pension election be changed from a survivor option to the straight life option. For more information, see Divorce.
- If you take the early reduced pension and also choose a survivor option, your early reduced pension is calculated first. This amount becomes the basis for calculating your survivor option payment.
- Equated Plan
Think of the equated plan as if you are borrowing against your pension until age 62.
Your pension is reduced at age 62 regardless of when you actually begin receiving your social security and regardless of how much it actually is.
Glossary of Terms
This plan pays you a higher pension until you are age 62, and then your monthly pension is permanently reduced. You might choose the equated plan if you want your overall income to remain fairly even both before and after social security begins.
So that your income (pension only) before age 62 is close to your combined income (pension and social security) after age 62, the increased pension before age 62 is based on a portion of your projected social security benefit. When you apply for your pension, provide us with an estimate of your age 62 social security benefit. To obtain your estimate, you'll need to request a statement from the Social Security Administration website, documenting your age 62 benefit amount.
Because calculating your "before and after" pension involves so many variables, it's not possible to provide tables and worksheets here. However, our online pension estimator will do it for you simply and quickly. Obtain your social security estimate as noted above, and plug in your numbers using the Estimate Pension option in miAccount.
The equated plan can be confusing. It is important to have a full understanding of it, because you can't change your mind after your retirement effective date.
As you can see in the illustration below, under the equated plan your pension amount drops at age 62.
When to choose the equated plan.
CONSIDER the equated plan if:
- You believe you would be ahead financially by investing the pension "advanced" to you before age 62.
- You want to receive as much income as you can as soon you can because your life expectancy is uncertain.
- You prefer having a relatively even income throughout your retirement.
DON'T choose the equated plan if:
- You don't want your pension permanently reduced at age 62.
- You like the idea of having more monthly income when social security begins.
- You don't want the higher pre-62 income to put you in a higher tax bracket.
- You expect to live longer than the life expectancy tables say, and you believe that the permanent reduction will end up costing you money.
Additional notes on the equated plan.
- Your pension is reduced at age 62 regardless of when you actually begin receiving your social security and regardless of how much it actually is.
- You cannot choose the equated plan if you are age 61 or older as of your retirement effective date, or if you are eligible for a disability retirement.
- The equated plan has no bearing on postretirement increases, so MIP retirees will get the standard 3 percent increase that is based on the initial pension amount calculated before the advance.
- Your pension payment reduction under the equated plan takes effect the month after your 62nd birthday. If your birthday falls on the 1st or 2nd of the month, your pension is reduced the month in which you turn 62.
- Early Reduced
If you are at least age 55, active (still working, not deferred), with at least 15 but fewer than 30 years of service credit, you may take an early reduced retirement. Be sure to verify you meet these requirements before you terminate employment - review your annual Member Statement or contact ORS.
Calculate your straight life pension, and then reduce it by one-half of one percent (0.005) for each month and fraction of a month you take your pension before age 60 (6 percent per year).
Additional notes about the early reduced option.
- The reduction in your pension is permanent. Expect to receive the same amount throughout your lifetime, with the exception of postretirement increases.
- For most members, choosing the early reduced retirement has no effect on insurance eligibility, coverage, or premium subsidy. Insurance benefits are the same whether you take a full retirement or early reduced retirement.
- If you have the Graded Premium Subsidy and you have earned at least 25 years of service as of your retirement effective date, you will qualify for the maximum subsidy. If you have fewer than 25 years of earned service, you will qualify for the graded subsidy at age 60 based on your years of service as of your retirement effective date.
- The 3 percent postretirement increase for MIP retirees will be based on the initial dollar amount of the early reduced pension amount.
- The early reduced pension calculation is performed before determining your pension amount under a survivor option or the equated plan.
- For early reduced option purposes, your retirement effective date is the first of the month following the date you last earned any reportable compensation unless the summer birthday provision applies.
- Equated and Survivor Options
You can elect any of the survivor options and can still choose the equated plan. These are known as the 100% equated, 75% equated, and 50% equated plan options.
To calculate your equated survivor pension, we start with your applicable (100, 75, or 50 percent) survivor pension amount. We then use that figure and your social security estimate at age 62 to determine your pre-62 and post-62 equated amount.
If you are interested in creating a combined equated and survivor option pension estimate, refer to our online pension estimator.
Additional notes about the equated survivor option.
- If your beneficiary should die before you, your benefit will revert to a straight life equated plan.
- Upon your death, your survivor will receive the standard survivor amount calculated under a 100, 75, or 50 percent survivor benefit, as if the equated plan was not chosen.
Recommended resources for help in estimating your pension
This handy online estimator lets you key in your age, wage, and service information, and quickly estimates your future monthly pension.
Preretirement information meetings:
Attend one of our two-hour retirement seminars, held throughout the state all year long. Experienced ORS representatives will fully explain the plan and the process before fielding questions from the audience. Check our schedule and register for a seminar.