CalPERS retirees will receive a pension for the rest of their life. The amount of the pension is calculated with this formula:
When a member retires, the pension amount he or she actually receives depends on the payout options the retiree chose. At the time of retirement, a CalPERS member can choose from several payout options including the “Unmodified Allowance,” the highest benefit payable, or a modified options which would reduce the unmodified allowance to provide a lump sum or monthly benefit to a chosen beneficiary upon the member’s death. These modified options include:
Option 1 – Depending on the member’s life expectancy at the time of retirement and the amount he or she contributed to the plan will reduce the monthly benefit to provide a lump sum payment of remaining contributions to a beneficiary upon the member’s death.
Option 2 – This option will provide the beneficiary with the same retirement allowance that the member received for life.
Option 2W – The member can elect to leave the beneficiary a slightly higher allowance with the caveat that the allowance will not be eligible to increase to the Unmodified Allowance.
Option 3 – This option will pay a beneficiary half of the monthly retirement allowance for life.
Options 3W – This option can provide a slightly higher allowance with the caveat that the allowance will not be eligible to increase to the Unmodified Allowance.
Option 4 – This special option offers the participant flexibility in designing a benefit for unique situations.
Survivor Continuance is an alternative to the above modified options. Under this option, the participant’s allowance will automatically be paid to an eligible survivor after the participant’s death. Eligible survivors include:
A spouse to whom the participant had been married at least one year prior to retirement
A domestic partner registered with the State of California
A child under age 18 who has not been married
A child who was disabled before age 18, was never married and continues to be disable and dependent upon the participant.