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Pension Maximization

Pension Maximization

Spousal Pension Maximization

  • Increases retirement option awareness
  • Reduces the cost for members choosing a survivor pension
  • Provides for a tax-free spousal income benefit
  • Allows for a rebate of costs should the spouse die first
  • Tax-free lump sum settlements for your family upon premature death
  • Provides necessary risk management to cover tax liabilities on the members field annuity at death
  • Increases retirement income for all members
  • Valuable disability income coverage 24 hours a day (if you qualify)
  • Allows member Tax-Deferred savings options

Hypothetical Comparison of Life Only vs. Joint and Survivor


Option
During Participant’s
Life

At Participant’s Death,
Spouse Receives

Cost to Participant
In Lost Pension Benefits

Life Only Option

Participant receives maximum lifetime
benefit/spouse receives nothing after
participant’s death

$2,000/month
Before income tax

$0/month
Before income tax

Monthly – $0
Annually – $0
Over 10 years – $0
(all before tax)

Joint and 50% Survivor Option

Participant receives lower lifetime benefit/
spouse continues to receive 50% of
participant’s benefit after participant’s death

$1,600/month
Before income tax

$800/month
Before income tax

Monthly – $400
Annually – $4,80
Over 10 years – $48,000
(all before tax)

Joint and 100% Survivor Option

Participant receives a significantly lower
lifetime benefit/spouse continues to receive
100% of participant’s benefit after participant’s death

$1,400/month
Before income tax

$1,400/month
Before income tax

Monthly – $600
Annually – $7,200
Over 10 years – $72,000
(all before tax)

 

 

Union Member Pension Plan Example:

 

Option #1:

Life only Benefit*

  • $3450 Per Month: You receive this as long as you are alive
  • Upon your death: your spouse will receive nothing
*Based on 30 years of continuous service crediting $115 monthly.

Option #2:

Employee & Spouse

  • $3105 Per Month: You receive this as long as you are alive
  • $1552 Per Month: Your spouse will receive this upon your death
  • $345 Per Month: The amount your income is reduced by including the Spouse Benefit
Why modify your plan? Consider the following circumstances:
  • Your age: 55
  • Spouses age: 52
  • Life expectancy: 22 years
$345 loss per month x 12 months is a $4140 yearly loss. Over 22 years that totals a $91,080 loss by including the Spouse Benefit. Once both retiree and spouse die, there is no benefit for children, grandchildren, church or charity.

Option #3:

Pension Maximizer

  • You select the Life only Benefit
  • $3450 Per Month: You receive this as long as you are alive
  • $345 Per Month: You pay this each month for Life Insurance
  • $400,000 Member Lump-Sum Death Benefit (Income Tax Free)
Income for Spouse with Pension Maximizer: 6.5% of Principal “After-Death”
  • In the bank: $400,000
  • Annual: $26,000
  • Monthly: $2166
Pension Amount for Surviving Spouse
  • Under Employee and Spouse Plan: $1552 (Option #2)
  • Under Pension Max $2166 (Option #3)

Please note that the above numbers are estimates and are not intended to represent final pension benefits.

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