ERISA requires most defined benefit plans to offer a Qualified Joint Survivor Annuity (QJSA) unless the benefit plan participant chooses a different form and his or her spouse agrees to the choice in writing. The QJSA benefit is paid to the participant each year and, on the participant’s death, a survivor annuity is paid to the surviving spouse. The survivor annuity or survivor benefit is paid to the participant’s surviving spouse for the remainder of his or her life. Such survivor annuity may vary from 50% to 100% of the benefit the participant was receiving during their lifetime.
In a divorce situation, the only way to establish the right of a former spouse to a QJSA is by way of a QDRO.
Joint and survivor pensions make a single monthly payment, but have two beneficiaries — typically the worker and their spouse. Joint and survivor pensions pay a monthly benefit until both beneficiaries pass away.
Because there’s a good chance that they will have to pay benefits for longer than a single life pension, joint and survivor pensions typically pay a reduced monthly benefit. Essentially, you are giving up some of your monthly income, in exchange for the peace of mind that your spouse or domestic partner will continue to receive monthly income, even after you are gone.
In addition to QJSA, there are many other options.