Game Changer: 2019 Option Costs

Due to the recent changes to the cost of pension options many pre-retirees have been asking about pension options.  For some pre-retirees, the decision to select a pension option in the past may have been cost-prohibitive (too expensive).  All five of the NYC Pension Funds (BERS, FIRE, NYCERS, POLICE, & TRS) have updated their mortality tables in reference to option cost factors.  The following examples compare the 1985 vs. 2019 option costs for POLICE using different ages of the retiree and beneficiary.  The calculation of the option cost is specific to the retiree and is based on many different factors.

 

$70,000 Police Service Pension

42/42

1985 Option
Cost Monthly
2019 Option
Cost Monthly

% Decrease

100% to beneficiary

$618 $272

56%

50% to beneficiary

$326 $139

57%

 

$80,000 Police Service Pension

50/50

1985 Option

Cost Monthly

2019 Option

Cost Monthly

% Decrease

100% to beneficiary

$988 $483

51%

50% to beneficiary

$533 $251

53%

 

$100,000 Police Service Pension

63/63

1985 Option

Cost Monthly

2019 Option

Cost Monthly

% Decrease

100% to beneficiary

$2,277 $1,077

53%

50% to beneficiary

$1,318 $576

56%

 

Using the 50/50 (50-year-old retiree and 50-year-old beneficiary) as an example, the pop-up option may be a favorable choice.

$80,000 Police Service Pension

50/50 1985 Option

Cost Monthly

2019 Option

Cost Monthly

2019 additional monthly cost
for pop-up

100% to beneficiary
with pop-up
$1,068 $521

$38

50% to beneficiary
with pop-up

$581 $271

$20

 

 

2 replies
  1. Steve
    Steve says:

    When I retired 8/16 the options were too high
    Now based on these numbers they are much more appealing
    Too bad we can’t get it.
    How about a retiree that took the 100% pop up and is paying $2,600 a month will his monthly get reduced now?

Comments are closed.