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Survivor Annuity Formula Components

 

 

 
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  2. Survivor Annuity Formula Components
 
 
Survivor Annuity Formula Components

 

TIER I
The survivor tier I amount is based on the deceased employee's combined railroad retirement and social security credits, and is computed using social security formulas. In general, the survivor tier I amount is equal to the amount of survivor benefits that would have been payable under social security.

The gross survivor tier I amount (before reductions for early retirement, or other benefits) is generally equivalent to the unreduced tier I retirement benefit the deceased employee had, or would have, received.

For surviving aged or disabled widow(er)s, remarried widow(er)s, and surviving divorced spouses whose annuities begin a year or more after the employee's death, the average indexed monthly earnings, upon which the tier I benefit is based, may be reindexed using a later year if it would result in a higher benefit, provided the employee died before age 62. The reindexing takes into account changes in national earnings levels which occur after the employee's death but before the survivor becomes eligible for benefits. This provides a benefit consistent with earnings levels at the time of the survivor's eligibility, rather than the time of the employee's death.

A widow(er), surviving divorced spouse or remarried widow(er) whose annuity begins at full retirement age or later receives the full tier I amount unless the deceased employee received an annuity that was reduced for early retirement. The eligibility age for a full widow(er)'s annuity is gradually rising from 65 to 67. The maximum age reductions will range from 17.1 percent to 20.36 percent, depending on the widow(er)'s date of birth. For a surviving divorced spouse or remarried widow(er), the maximum age reduction is 28.5 percent. For a disabled widow(er), disabled surviving divorced spouse, or disabled remarried widow(er), the maximum reduction is 28.5 percent, even if the annuity begins at age 50.

A widow(er) or surviving divorced spouse whose eligibility is based on caring for a child of the employee receives 75 percent of the full tier I amount. Benefits to a surviving divorced spouse end when the child is 16. An eligible child also receives 75 percent of the full tier I amount. The total amount the family can receive is subject to a maximum (usually applicable if there are three or more family members, not counting aged or disabled surviving divorced spouses, entitled to survivor annuities).

A dependent parent can receive 82.5 percent of the full tier I amount, but if both parents are eligible, the total amount cannot be more than 150 percent of the full tier I amount.

Dual benefit reduction
The tier I amount described above is reduced by the amount of any social security benefit or by the tier I amount of any railroad retirement employee annuity the survivor also receives. In the case of a widow or dependent widower who is also a railroad employee annuitant, and either the widow(er) or the deceased employee had at least 10 years of railroad service before 1975, the tier I reduction may be partially restored in the survivor tier II amount. If either the deceased employee or the widow(er) had some railroad service before 1975 but less than 10 years, the survivor tier I portion is payable only to the extent that it exceeds the tier I portion of the widow(er)'s own employee annuity.

The tier I amount may also be reduced by certain Federal, State, or local government pensions which are based on a widow(er)'s own earnings. For widow(er)s subject to the government pension reduction, the tier I reduction is equal to 2/3 of the public pension.

TIER II

Widow(er)s
December 2001 legislation established an "initial minimum amount" which yields, in effect, a widow(er)'s tier II benefit equal to the tier II benefit the employee would have received at the time of the award of the widow(er)'s annuity, minus any applicable age reduction. It does this by providing an additional amount, initially set at 50 percent of the employee's tier II, to the 100 percent tier I and 50 percent tier II benefits provided under prior law.

This additional amount is offset each year by the dollar amount of the cost-of-living increases payable in both the tier I and tier II benefits provided under prior law. Consequently, such a widow(er)'s net benefit payment will not increase until such time as the widow(er)'s annuity, as computed under prior law with all interim cost-of-living increases otherwise payable, exceeds the widow(er)'s annuity computed under the initial minimum amount formula.

The initial minimum amount provision applies to all widow(er)s whose annuities begin February 1, 2002, or later, and to some, but not all, widow(er)s on the rolls before that date. If, because of previous cost-of-living adjustments, annuities awarded before February 2002 were already higher than the annuity that would be payable under the December 2001 legislation, the provision did not apply.

In most cases, the same age reductions that apply to tier I amounts also apply to tier II amounts.

If the widow(er) qualifies for a railroad retirement employee annuity and neither the widow(er) nor the deceased employee had any railroad service before 1975, the survivor annuity (tier I and tier II payable to the widow(er) is reduced by the total amount of the widow(er)'s own employee annuity.

Other survivors

Each child receives 15 percent of the deceased employee's tier II amount, and each surviving parent receives 35 percent.

The minimum total tier II amount payable to a family is 35 percent of the employee's tier II amount, and the maximum is
130 percent.

A tier II benefit is not provided for a surviving divorced spouse or a remarried widow(er). However, partition payments may be extended to surviving former spouses pursuant to divorce agreements. A tier II benefit is not payable to surviving parents if other family members may receive benefits or if the parent has remarried.

Survivor-Spouse Guaranty
A widow(er) who received a spouse annuity from the RRB is guaranteed that the amount of any widow(er)'s benefit payable will not be less than the annuity she or he was receiving as a spouse in the month before the employee died. If the survivor-spouse guaranty applies, increases are not payable until the regular survivor formula produces more in benefits than the spouse guaranty. At that point, benefit components are based on the regular survivor formula and both tier I and tier II amounts are increased for the cost of living.

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Last updated: 06/12/2017