Retirement Options

Overview

Retirement Options

At the time you file an application for retirement benefits, you must elect one of five different retirement options. Once your retirement benefit is received, your selection of a retirement option may not be changed. Descriptions of the Unmodified Retirement Benefit and Optional Settlements 1, 2, 3 and 4 are as follows:

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Unmodified Retirement Allowance Benefit

The Unmodified Retirement Benefit provides the highest monthly benefit possible under the law. It is paid during your lifetime as a retiree and provides a 60% lifetime continuance to an eligible surviving spouse.

An eligible surviving spouse is either:

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Optional Settlement 1

This option provides for a retirement benefit at a reduced level from that of the Unmodified Retirement Benefit. Under this option, your accumulated contributions are reduced only by the annuity portion of your monthly retirement benefit.

If you pass away before receiving annuity payments equal to your total accumulated retirement contributions on deposit at the time of your retirement, your named beneficiary or estate will be paid the remaining balance of accumulated contributions in a lump sum.

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Optional Settlement 2

This option provides a retirement benefit that has the largest reduction from that of the Unmodified Retirement Benefit. This option provides 100% continuance of the retirement benefit to your spouse or beneficiary who has an insurable interest in your life. The amount of the retirement benefit under this option is directly affected by the age of the beneficiary. The younger your beneficiary, the more the monthly benefit will be reduced because of their longer actuarial life expectancy.

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Optional Settlement 3

This option is similar in principle to Optional Settlement 2, but the reduction in the benefit is not as great and the beneficiary receives only a 50% continuance of your retirement benefit at the time of your death.

Your beneficiary must have an insurable interest in your life and have been your named beneficiary at the time of retirement.

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Optional Settlement 4

This option provides a lifetime retirement benefit to you and continuances to your surviving beneficiaries in a percentage you elected at the time of retirement. The amount of the retirement benefit payable will depend on the age of your beneficiary and the percentage you elected to be paid to the beneficiary as a continuance. The beneficiary must have an insurable interest in your life and all payments cease upon the death of both you and your beneficiary(ies).

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Level Income Option

If you retire prior to age 62 and are fully insured under Social Security at the time of retirement, you may elect to have retirement benefits increased until age 62. At age 62, your monthly retirement benefit from VCERA will be significantly reduced by an amount that is the actuarial equivalent of the payments that have been advanced as the result of selecting this option. If you are retiring for disability, you are not eligible to elect this option.