Coverage B – Survivor Benefit If Member Dies Before Retirement

Under Coverage B, benefits are payable to your survivors if you became a member of CalSTRS on or after October 16, 1992, or elected Coverage B in the election held between October 1992 and April 1993.

One-Time Death Benefit

Under Coverage B, if a CalSTRS member dies before he or she retires, CalSTRS pays a $24,652 one-time death benefit to recipient or recipients named by the member (This amount is adjusted periodically by the Teachers' Retirement Board.)

If more than one recipient is named, the payment is divided equally, unless the member specified other percentages of distribution. If there is no recipient named, CalSTRS must make the payment to the estate of the deceased member.

For CalSTRS to pay this benefit, the member must have earned one year or more of credited service prior to the date of death, at least one of which had been performed subsequent to the most recent refund of accumulated retirement contributions, if the member died during any one of the following periods:

• While in employment for which creditable compensation is paid
• Within 4 months after termination of creditable service or termination of employment, whichever occurs first
• Within 12 months of the last day for which creditable compensation was paid, if the member was on an approved leave of absence without creditable compensation for reasons other than disability or military service

If the member worked part time, death must have occurred within 4 months after ending employment or earning service credit.

In addition to these qualifications, if the member had taken a refund of contributions or had reinstated after retirement, he or she must also have:

• Earned one year of service credit.
• Six months must have elapsed since reinstatement from disability retirement.

Qualifying for Monthly Survivor Benefits

The member must meet the same eligibility requirements as required for the one-time death benefit and:

• Cannot have a pre-retirement election of an option in effect
• Must have earned one year of credited CalSTRS service since reinstatement from service retirement, if applicable.
• Must have earned at least one-half year of service credit after a break in service of more than one year, if applicable.
• Must have died within four months after reinstatement from disability retirement, if the member had reinstated to active membership from disability retirement.

Under Coverage B, a monthly survivor benefit is payable to:

• The surviving spouse or registered domestic partner
• Eligible dependent children
• Eligible dependent children, but no surviving spouse or partner

If there is no surviving spouse, partner, dependent children or dependent parents, any remaining Defined Benefit contributions and interest in your account will be paid to your one-time death benefit recipients. If no recipient was named, CalSTRS must make the payment to your estate.

For more information on how the monthly survivor benefit is payable under Coverage B, refer to Section 9 of the Member Handbook.

Offsets

The monthly survivor benefit under Coverage B is not reduced by benefits payable from other public systems, such as Social Security.

Coverage B - Survivor Benefit Example

Linda can choose the surviving spouse benefit or she can choose to take a refund of the contributions and interest in Rob's Defined Benefit account. However, if she does not elect a monthly benefit, the children are not entitled to monthly benefits.

If Linda elects the survivor benefit, she will immediately receive 10 percent of final compensation for each child ($322 each) as of the date of Rob's death, until each dependent child reaches age 21.

Linda can choose to receive her surviving spouse benefit when Rob would have reached his 60th birthday (normal retirement age) and receive the full amount or she can choose to receive a reduced benefit immediately.

The surviving spouse benefit is calculated based on the amount of service credit at death, as if the member lived to age 60 and had retired naming her as a 50% Beneficiary Option beneficiary.

If Linda's choice is to defer receipt of her surviving spouse benefit, the child or children will receive the following benefit immediately as of the date of Rob's death:

10% of final compensation for each child
($322 x 3 children) = $966

Linda would not receive a spouse benefit until Rob reached age 60, which would be 20 years from this time. She would then receive a spouse benefit of $302.94 for the rest of her life. See below for calculation of the beneficiary allowance.

Each child's separate monthly benefit will stop when that child reaches age 21. After the youngest dependent child's benefit terminates, Linda will continue to receive her spouse benefit, $52.86 per month in this case, for her lifetime.

In addition, an annual benefit improvement increase of 2 percent of the basic benefit will be added to the benefit each September, beginning a year after Rob's death.

Choices Linda must make for the spouse's monthly benefit:

• Defer benefit until Rob’s 60th birthday
  $605.88 / 2 =$302.94
  
• Start benefit as of the date of Rob’s death
  $302.94 x .1745 (age 40 - 50% Beneficiary Option age factor) =$52.86