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Coverage B survivor benefits—If you die 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 you die before retirement, CalSTRS pays a $25,920 one-time death benefit to your designated recipient or recipients. This amount is adjusted periodically by the Teachers’ Retirement Board.

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

For CalSTRS to pay this benefit, you must have earned at least one year of service credit prior to the date of death, and your death must have occurred during one of the following periods:

  • While performing creditable service.
  • Within four months after you terminated employment or last earned creditable service.
  • Within 12 months of the last day for which creditable compensation is paid, if you were on an approved leave of absence without compensation for reasons other than disability or military service.

If you worked part time, your death must have occurred within four months after you ended employment or earned service credit.

In addition to these qualifications, if you had taken a refund of contributions or had reinstated after retirement:

  • You must have earned at least one year of service credit after your refund or reinstatement.

Or

  • Six months must have elapsed since your reinstatement from disability retirement.

Qualifying for monthly survivor benefits

For your survivors to be eligible for a monthly survivor benefit, you must have met the same eligibility requirements as those for the one-time death benefit and you:

  • Cannot have a preretirement election of an option in effect.
  • Must have earned at least one year of CalSTRS service credit if you reinstated from service retirement.
  • Must have earned at least six months of service credit if you had a break in service of more than one year.
  • Must have died within four months if you reinstated from a disability retirement.

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

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

If you have no surviving spouse, partner or eligible dependent children, 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 the Member Handbook.

Benefit reductions

The Coverage B monthly survivor benefit will not be reduced if your survivors receive survivor benefits from other public systems, such as Social Security.

Coverage B survivor benefit example

Sharon dies at age 57. Her survivors include a spouse, David, and three children eligible for benefits. Her final compensation is $3,220.

David's choices: David can choose the monthly surviving spouse benefit or he can choose to take a refund of Sharon’s Defined Benefit contributions and interest. However, if he does not elect the monthly survivor benefit, their children are not entitled to a monthly benefit.

If David elects the survivor benefit, he will immediately receive 10% of final earned compensation for each child ($322 each) as of the date of Sharon’s death, until each eligible dependent child reaches age 21. These payments will go to David until his children reach age 18, when the children can request the payments be made directly to them.

The surviving spouse benefit is calculated based on the amount of service credit at death, as if Sharon had lived to normal retirement age and had retired naming her spouse as a 50% Option Beneficiary, which provides half of the modified retirement benefit.

David can choose to defer his monthly spouse’s survivor benefit until Sharon would have reached normal retirement age and receive the full benefit, or start the benefit as of the date of her death and receive a reduced benefit.

Survivor benefit example

  • Member: Sharon, age 57
  • Spouse: David, age 55
  • Children: Joe, 20; Sam, 18; and Jake, 15
  • Service credit: 10 years
  • Final compensation: $3,220

Sharon’s Member-Only Benefit, as if she were normal retirement age:

2% x 10 years of service credit x $3,220

Member-Only Benefit = $644.00

Reduced benefit, based on option factor of 0.9513, (member and spouse normal retirement age):

$322 x 3 children = $966

David would receive, when Sharon would have reached normal retirement age, half of Sharon’s reduced benefit:

$612.64 ÷ 2 = $306.32

David could begin receiving, as of the date of Sharon’s death, an actuarially reduced benefit:

$306.32 x 0.6237 = $191.05

Here are the choices David must make for the spouse’s monthly benefit:

Defers survivor benefit

If David chooses to defer receiving his surviving spouse benefit, their children will receive the following benefit immediately as of the date of Sharon’s death:

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

David would receive no surviving spouse benefit until Sharon would have reached normal retirement age, which would be in three years. He would then receive a surviving spouse benefit of $306.32 for the rest of his life.

Starts survivor benefit immediately

If David elects to take his surviving spouse benefit immediately, the family will receive the following survivor benefit:

  • David’s reduced spouse benefit: $191.05
  • $306.32 (50% Beneficiary Option) x 0.6237 (age 57 age factor): $191.05
  • 10% of final earned compensation for each child ($322 x 3 children): $966
  • Total = $1,157.05

When they reach age 21, each dependent child’s benefit will stop. After David’s last child is no longer eligible, he will continue to receive his spouse’s benefit, $191.05 a month, for his lifetime. In addition, an annual benefit adjustment increase of 2% of the basic benefit will be added each September, beginning a year after Sharon’s death.