TN Consolidated Retirement System

At retirement, everyone is faced with one of the most important financial decisions of their lives: the selection of a retirement payment plan. TCRS offers two single life plans that end upon the member's death, and four joint survivorship plans that continue payments for one designated beneficiary at the member's death. The choice should be based on health, economic, and life-style factors.

Single Life Annuities*

Regular or Maximum Plan-Maximum monthly benefits are payable to a member for life, with all benefits ceasing at death. Monthly benefits end at the member's death, but the beneficiary is entitled to payment of any remaining contributions which had been credited to the member's account and which were not returned to the member in the form of retirement benefits.
Social Security Leveling- A member may convert his or her retirement allowance into an increased benefit payable prior to the date the member attains age 62 and a reduced allowance payable after that date, so that the member's total income will be approximately the same before and after the commencement of Social Security payments. Monthly benefits end at the member's death, but the beneficiary is entitled to payment of any remaining contributions in the member's account which were not returned to the member in the form of retirement benefits. If this plan is elected, the member must furnish the retirement system with an age 62 Social Security estimate. It is the member's responsibility, upon attaining age 62, to apply for the Social Security benefit.

* Note: The State Insurance Plan no longer requires that a retiree select a retirement survivorship option in order for surviving dependents to continue coverage after the retiree’s death. This does not eliminate the need to select a survivorship option to protect your family.

Joint and Survivor Annuity Options

Option I (100 Percent Joint and Survivor)- A permanently reduced retirement allowance is payable during the retired member's life, with the provision that it will continue after death for the life of, and to, the designated beneficiary. If the beneficiary dies before the member, the monthly allowance will remain the same.
Option II (50 Percent Joint and Survivor)- A permanently reduced retirement allowance is payable during the retired member's life, with the provision that it will continue after death at one-half the rate paid for the life of, and to, the designated beneficiary. If the beneficiary dies before the member, the monthly allowance will remain the same.
Option III (Modification of Option I)- A reduced retirement allowance is payable during the retired member's life with the provision that it will continue after death for the life of, and to, the designated beneficiary. If the designated beneficiary dies before the retiree, the retirement allowance will revert (pop-up) to the maximum amount.
Option IV (Modification of Option II)- A reduced retirement allowance is payable during the retired member's life, with the provision that it will continue after death at one-half the rate paid for the life of, and to, the designated beneficiary. If the designated beneficiary dies before the retiree, the retirement allowance will revert (pop-up) to the maximum amount.

Comparing Amounts Payable Under the Various Payment Plans

When you are planning your retirement, you should request an estimate of the benefits which would be payable under each of the payment plans available to you.

After your application for retirement is processed, TCRS will send you a letter showing the amount of your benefit under the payment plan you selected as well as the amount you would be eligible to receive under each of the other payment plans, except for Social Security leveling. You will be allowed 60 days from the date of the notice letter to change the plan you initially selected. After this 60-day period, the election of an optional payment plan cannot be changed nor revoked. A member who selects the regular or maximum plan may change to an option at a later date by repaying the difference in benefits.

OPTIONS TO CONSIDER

Do you need a survivorship plan?
Are you married? Single retirees with no financial obligations for other family members may not need a survivorship option.
Does your spouse have a retirement plan other than Social Security? If your spouse has a pension plan, a survivorship option may not be necessary, provided that such pension allows your spouse to maintain an acceptable standard of living. Otherwise, an option may be necessary.
Will your TCRS pension provide the principal means of support for the family? What will be the level of family income in the event of your death?
Do you or your spouse have any life-threatening health problems?
Consider gender; females, on the average, live longer than males.
Do you have a parent or child that will need income in the event of your death?
What is your family history regarding health, long life or premature death?
What is your spouse's family health history?
If you are inclined to take a survivorship option and if your spouse passes away, will your personal income need to be increased due to the loss of your spouse's income?
Are there any life-style factors that may shorten the life expectancy of you or your spouse? (Examples: smoking, lack of exercise, diet)
Will other property or assets be available that can be liquidated to support the surviving spouse?

Examples

Mr. Smith has a full TCRS career. His wife is still working, but will have no pension of her own. Both are in excellent health and both their parents are living and in their 80s. Mr. Smith is planning to take an option, but wants the benefit reduction restored if his wife passes away first. He decides to take Option 3- the 100% joint survivor annuity with pop-up feature.
Mr. Johnson has chronic high blood pressure, smokes two packs of cigarettes a day and has suffered two heart attacks. His wife has an excellent family history and has a healthy life-style. He decides to take Option 1- the 100% joint survivor annuity.
Mrs. Brown has a full TCRS career. Her husband is also a teacher under TCRS. Both are in excellent health and have similar family history. Mrs. Brown is a supervisor, so her pension will be substantially higher than her husband's. She selects Option 4- the 50% joint survivor annuity with pop-up feature. Her husband will need some of her income to maintain his standard of living in the event of her death, and she needs to eliminate the reduction in the event of his death.
Mr. Jones is a TCRS member in excellent health. His wife has been diagnosed with cancer and has a poor prognosis. She does not have a pension. Mr. Jones should consider term life insurance and drop it when it's not needed, or select Option 3 or Option 4- the joint survivor options with the pop-up feature. The determining factor here would be the cost of the term life insurance versus the amount of reduction to take Option 3 or Option 4.
Miss Stewart started working with the state at age 18. She is single and planning to retire the minute she completes 30 years of service. Since she is planning a life of leisure, she needs some additional income until her Social Security benefits begin in 14 years. She selects Social Security Leveling.
Mr. Jackson is in excellent health and is retiring at age 62 after 35 years of service. His wife has a substantial pension and health insurance based on her own career. She has some serious continuing health problems and has a poor family history. Mr. Jackson selects the Regular Plan with all benefits ending at his death.

In the final analysis, many of the factors are related to predicting which of the spousal partners will survive the other. While this may seem to be an impossible task, factors such as health, family history and life-style are indicators that can help you. Evaluation of the likelihood of survival can lead to selection of the best option. Likewise, evaluation of the economic considerations is not an exact process, but can assist in selecting the appropriate plan.

While the TCRS counselors cannot tell you which option to select, they can help you work through the decision process. The counselors are located on the 10th floor of the Andrew Jackson State Office Building in Nashville, or they can be reached by calling (615) 741-1971 or 1-800-770-8277 ext. 4.

Effective September 2003