Taking Care of Mom and Dad: Survivor Benefits

Defined benefit pension plans normally provide survivor benefits if a worker dies either before or after retirement benefits begin. In most cases, the surviving spouse would receive any vested benefits. However, if the worker specifically declines the survivor option at retirement in writing, this won't happen.

Why would anyone turn down a survivor benefit? Because it costs something. Typically, when a survivor benefit is chosen, the overall retirement benefit is reduced to reflect the longer combined life expectancy of the retiree and spouse.

If a worker dies before retirement, the plan does not have to pay the benefits to the spouse until the earliest date that the deceased worker could have begun receiving retirement benefit payments.

For example, if your dad dies at age 50, and the plan says that the earliest he could receive benefits is at age 55, your 50year-old mom would have to wait five years to receive benefits. If he dies after retiring, your mom would receive at least 50 percent of the benefits your dad had been receiving if he was receiving benefits that included a minimum survivor benefit. The benefits would continue until your mom dies.

Pensions can't usually be attached for debts owed. However, in the event of a divorce or separation, a judge can order a plan to pay a share of a worker's pension directly to a spouse, former spouse, child or other dependent. For this to occur, the order must be a Qualified Domestic Relations Order (QDRO) and must meet strict legal requirements concerning the facts involved and benefits affected.