What Happens When I Die?

No, this article is not about deep matters of philosophy or religious belief.  That’s above our pay-grade here at the SLO County Pension Trust (SLOCPT).

What it is about is the need of our Members to know how to care for their loved ones by having their pension matters well in hand before they die. 

Your pension is a major financial asset – manage it!

Members contribute large amounts out of each paycheck to their defined benefit pension (average ~17% of pay).  Your employer contributes even more to the pension (average ~36% of pay).  Should you retire and draw your pension, it is a lifetime stream of income that can be many hundreds of thousands of dollars.

For your SLO County pension you need to make sure that your spouse/partner or your estate receives all the money that SLOCPT owes them.  Keep your beneficiary form current, change your address on file with SLOCPT when you move, and leave instructions and documents for your loved ones so if you die unexpectedly, they know what to do. 

You don’t want your family to resent you for the administrative mess you left behind. 

What if I die before retiring? 

The SLO County Retirement Plan has a death benefit that can, depending on your age and years of service, be either a lump sum payment that is possibly well over $100,000 or a payment of a lifetime pension benefit to your surviving spouse. 

How do you prepare for this sad event?

• Beneficiary Designation:  Keep your beneficiary designation up to date with SLOCPT!  This beneficiary designation covers the $1,000 lump sum death benefit after you are retired, but it also covers what could be a large lump sum death benefit should you expire prematurely.  So, take the designation of a beneficiary seriously because it could be a lot of money. 

Your Primary Beneficiary must be your spouse if you are married, unless they give permission for it to be someone else.  Members who are single may name someone else as a beneficiary for these lump sum payments.  

If you pass away unexpectedly with no named beneficiary, SLOCPT must pay any lump sum death benefit to “your estate”.  This may or may not be what you intended.  It could also cause significant effort for your heirs to collect. 

• Marital Status:  If you get married, provide SLOCPT with a copy of your marriage license and the birth certificate of your spouse. 

If you get divorced, confer with SLOCPT before you finalize the terms of your Domestic Relations Order (DRO).  California is a community property state so your DRO must address your pension as an asset.  Marriage or divorce is also a good time to update your beneficiary form so a large lump sum death benefit does not go unintentionally to your ex-spouse.

When I die after retiring, does my spouse get my pension?

When you retire, you will select a “payment option” for your pension.  The SLO County Retirement Plan automatically includes a 50% continuance of your pension to your surviving spouse.  Note - Surviving spouse (gender doesn’t matter) means someone with whom you filed a Marriage License or a Registered Domestic Partner agreement for over a year at retirement. 

You can select other options for your pension pay-out that might allow for a 100% continuance of your pension to a surviving spouse – albeit with a reduction in the size of your monthly benefit.

How do you prepare for your death in retirement?

• Carefully Select your option:  Should you predecease your spouse, how much of an economic hardship is the loss of 50% of your pension to them?   Would they need the full 100% of your pension paid for the rest of their life?  If so, you may want to pick that option.  There are other pension payment options that may better suit your situation.  Should your spouse predecease you, there is no continuance of your pension, but there is a $1,000 death benefit.  

• Beneficiary Designation:  Keep your beneficiary designation up to date with SLOCPT!  This applies to the $1,000 death benefit.

• Change of Address:  Notify SLOCPT whenever you move.  We send monthly payment notices and a year-end IRS Form 1099-R to the address on record.  If you move but don’t tell us, and then pass away, your survivors may not get mailings they need.

Can I name my Trust to get my pension?

If you have a revocable living trust you may want to have any lump sum death benefit paid to that trust.  For continuing, monthly pension benefits, those must be directed to a person, not a trust.

What happens to my monthly pension benefit when I die?

SLOCPT pays pension benefits monthly on the 1st business day of the month in advance.  This means that if we are not notified of a retiree’s death until over a month later, we may have to “pull back” a payment via the ACH process from the direct deposit bank.  We would then convert that monthly pension to a survivor continuance if that were applicable.

Preparing records for my loved ones.

Your pension file should be known to your spouse/partner, your adult children, the Trustee of your trust or the Executor / Personal Representative of your will, or whoever will tend to your affairs.  If you have set up a Power of Attorney (POA) to have someone manage your affairs when you are no longer able to, the holder of that POA also needs to know where your pension files are. 

Let them know that they need to contact SLOCPT soon after your death and provide a copy of your death certificate.

Notifying the Pension Trust

Upon your passing, your family should contact SLOCPT within a few days.  When one is available, we will need a copy of your death certificate.  Should you have a surviving spouse to receive a continuance of your pension benefit, they will need to contact the SLOCPT about getting the benefit converted to their name.  They may also need to fill out updated tax withholding and direct deposit forms.

What about my County Health Benefits?

If you use the SLO County health insurance benefit while in retirement (not all retirees do), your family also needs to contact the SLO County Human Resources Department at 805/781-5959.  A change in who is covered under the health benefit plan will need to be taken care of.  Also, there may be a change in the premiums that SLO County HR deducts from your pension payment each month.

All this gloomy content aside – we wish you a long and prosperous life!  Just make sure you are prepared, and your family is prepared.

As always – contact SLOCPT at 805/781-5465 or email at slocpt@co.slo.ca.us for questions about the SLO County pension that is a core part of your employee benefits.

By Carl Nelson

Executive Director, SLO County Pension Trust