Can a Beneficiary Be Paid the Monthly Benefits on a Pension Plan When the Member Is Deceased?

If a participant in a pension plan is married and dies before his spouse, his spouse automatically receives either 100 percent or 50 percent of the participant's retirement benefit until the spouse dies, unless the spouse refuses the annuity by signing a waiver and consent form. An unmarried participant or a married participant with a signed spouse waiver and consent form can designate a non-spouse beneficiary. However, a non-spouse beneficiary is not entitled to any portion of the participant's monthly retirement benefit. The beneficiary is entitled to the participant's remaining savings account balances and other one-time death benefits paid by the plan.

Pension Annuity

A pension plan pays a participant a monthly benefit according to a formula that considers salary and years of service. The monthly benefit is discounted based on the employee's age at retirement and is paid as a life annuity. For example, if a participant's normal retirement age is 65, and the plan permits early retirement at age 55, a participant's monthly benefit would be reduced if he chose the early retirement option.

Joint and Survivor Annuity

The Employee Retirement Income Security Act of 1974 and the Retirement Equity Act of 1984 require a qualified pension plan to automatically pay a married participant an annuity that provides 100 percent of a benefit until the participant's death and no less than 50 percent and no more than 100 percent of the same benefit until the participant's spouse's death if the participant dies first. The law also requires a company to pay the accrued retirement benefit as an annuity to a participant's spouse if the participant dies before retirement.

Waiving Automatic Spouse Entitlement

Many plans offer the option of either a 50 percent or 100 percent joint and survivor annuity, and the plan participant must choose one or the other before he starts receiving his pension. It is possible for a spouse to refuse the qualified joint and survivor annuity and for the participant to name someone other than his spouse as the beneficiary after his death. The spouse and participant must both sign a waiver form removing the spouse from the annuity and must either appear in person to the plan administrator or have their signatures notarized. A participant's spouse must also sign a consent waiver document for the participant to name a beneficiary other than the spouse.

Non-Pension Plan Benefits

A participant's beneficiary is not entitled to receive the participant's annuity from a pension plan when he dies unless the beneficiary is his surviving spouse. If the participant doesn't have a surviving spouse, his beneficiary will only receive a term-certain annuity from a nonqualified retirement arrangement. A beneficiary will, however, receive the balance of funds belonging to a participant in a retirement savings plan such as a 401(k). Some plans also provide a lump-sum death benefit to a beneficiary, which would be paid to the beneficiary upon the participant's death.

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About the Author

Steve McDonnell's experience running businesses and launching companies complements his technical expertise in information, technology and human resources. He earned a degree in computer science from Dartmouth College, served on the WorldatWork editorial board, blogged for the Spotfire Business Intelligence blog and has published books and book chapters for International Human Resource Information Management and Westlaw.

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