Surviving Spouse's Pension Benefits

7/28/2019 Surviving Spouse's Pension Benefits

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Sur vi vi ng spouse' s benef i t si n pr i va t e pensi on pl ansMost pr i vate pensi onpl ans of fe r a l i f et i memnimumannui t y t o s ur v i vi ng spousesof about two- f i f ths of a worker ' s accruedbenef i ts ;however, mny spouses my recei ve a smal l er share,or my not be covered, accordi ng t oa BLsanal ys i s ofpl ans i n 1981DONALDBELLANDAVYGRAHAMWhenan a ct i v e worker or r e t i r e d employee di es, what ben-e f i t s does t he spouse recei ve fromemployer contri buti onst o a p r i v at e pensi on pl an' ? Whi l e t he Bureau of Labor Sta-t i s t i c s has no data on actual annu ty paymnts and t he number of be ne f i c i a r i e s recei vi ng them a r e p re s en t at i v e sampleof mediumand l a r ge companies shows that, as requi red byl aw t he pl ans o f f e r a surviving spouse a l i f e t i me annu ty However, both e l i g i b i l i t y requi remnts f or t h i s bene f i t andt he s i z e of monthly paymnts depend on whendeath occurs .I f death i s before r et i r ement, t he spouse usual l y i s e l i g i b l ef or an annu ty i f the empl oyee had s uf f i c i e nt age and s erv i cet o qual i fy f or ea r l y reti rement benef i t s ; t he s i z e of he annu tydepends on t he pensi on t he worker woul d have recei ved i fhe or she had opted f or earl y reti rement . ' (See chart 1 . ) I ft he employee had ret i red, t he typi ca l pl an woul d providef or a spouse' s annu ty equal t o about t wo- f i f t hs of t he work-e r ' s accrued benef i t s .Afew pensi onpl ans o f f e r "death be ne f i t s , " as wel l as

annui t i e s . Whi l e annui t i e s provide a l i f e t i me i ncom, deathbenef i t s are paid e i ther i n a l ump sumor f or a s pe ci f i e dnumer of months . The most common l ump-sumpaymnti s $ , 000 monthly deathbenef i t s most of ten ar e pai d f or 5years . However, i f death occurs a f te r r e t i rement , t he numer

Donal d Bel l i s a l abor economst andAvyGahami s a social sc i enceresearch anal yst i n t he O f i c e of Wges and I ndustr i a l Relat i ons Bureauof Labor Sta t i s t i c s

of mnthl y paymnts t o t he spouse i s reduced by t he numerof pensi onpaymnts al r eady recei ved by t he r e t i r e e .

Thi s a r t i c l e i s based on data fromt he Bureau s 1981surveyof employee benef i t s i n l a r ge andmediumf i r ms . 2 Asample of 1,505 establi shmnts across mst p r i v at e i ndus-t r i e s yiel ded data on t he de t ai l ed provisi ons i n 914 pensi onpl ans . Resu ts of t h i s surveyprovide representa t i ve data f or21 . 5 ml l i on employees i n 43, 325 establ i shmnts . Eighty-four percent of the employees were coveredby p r i v at e pen-si on pl ans-79 percent were under pl ans f u l l y pai d f or byt h ei r employer, and 5 percent paid part of t he cost .ERI SArequi remnts

Spouse benefi t provi s i ons of pr i vate pens i on pl ans r e f l e c tt he i nf l uence of t he Employee Ret i r ement I ncom Secur i tyAct of 1974 ( ERI SA) . Pensi onpl ans ar e not requi red by l aw,but once establ i shed, ERI SA requi res t h a t they prov i de f orannui t i es t o spouses of deceased employees The requi re-mnts d i f f e r f or death befor e and after ret i r ement .

Pensi on pl ans must nowinclude a "postreti remnt" an-nui ty arrangemnt whi ch pays a surviving spouse regul ari ncom equal to at l east hal f of the pensi on pai d t o t her e t i r ee . To do thi s , t he pl an may reduce t he pensi onpai dt o the r e t i r e e . Thi s reduced annu ty i s c al l ed a "j oi nt-and-survivor annu ty. " Amrri ed worker must be given anopportuni ty not t o pa r t i c i p at e i n a j oi nt-and-survivor an-nui ty- that i s , not t o accept a reduced annu ty . However,

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MONTHLYLABORREVEWApri l 1984 " Sur vi vi ng Spouse' s Pensi onBenef i t s

Chart 1 . Pr opor t i on of normal pensi on t ypi cal l y pai d under var i ous opt i ons'

1 7 1 =pensi on pai d

Reti rement at normal age

Employees pensi on

Empl oyee's pension

Survi vor' s pensi on'

Death before r eti r ement '

Survi vors pensi on

No sur vi vor coverage

' A' ' normal" pension i s that pai d t o an empl oyee who reti res at a plan'snormal age andwho elects not t o take the j oint- and-survi vor annui ty opti onThi s i s themaximumpensi on ava i l abl e to the empl oyee f or a spec i f i c l ength ofservi ce Thi s chart compares the amount typi ca l l y pai d under other opti onsw th this normal pension

Reti rement at an earl y age"

Empl oyees pension

Empl oyees pensi on

Survivor' s pensi on'' Assumes empl oyee dies 10 years before nor mal reti rement age w th 30

years of servi ce and i s el i gi bl e for survi vor coverage' Pai d t o spouse after death o1 emol eyee based on St -n-cen' cn" . i on' Assumes empl oyee retir es 10 years before nor mal reti r ement agew t h 30

years of servi ce and pensi on i s reduced 5 percent f or each year

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i f t he part i c i pant f a i l s t o el ect another formof annui t y, t hej oi nt- and- survi vor opti on automati cal l y becomes ef f ect i ve .Under pl ans which do nor r educe t he r e t i r e e ' s annui t y a sthe pri ce of cont i nui ng payments t o a survi vi ng spouse, t hesurvi vor may be pai d l e s s than 50 per cent of t he ret i ree' sannui t y provi ded t he r a t e does not produce a smal l er pr o-por ti on of t he r e t i r e e ' s unreduced pensi on than t h a t whichwould be achi eved by a 50- perc ent j oi nt-and- survi vor op-t i on .Pr i or t o enactment of ERI SA, most pl ans provi ded survi vorannui ti es onl y i f t he empl oyee vol untar i l y chose t he opti onat a speci f i ed ti me, such a s I year bef ore r eti r ement . I f ar e t i r e e di d not a c t , t he survi v i ng spouse was not el i gi bl e f oran annui ty . Al so, ERI SA prohi bi ts di sconti nuance of pay-ments i f a spouse remarri es-a f r equent provi s i on bef oret he l a w s passage

I f an empl oyee di es bef ore r eti r ement , ERI SArequi res t h a ta "preret i r ement " survi vor annui ty be avai l abl e i f t he pen-si on pl an gi ves empl oyees t he opti on of ret i r i ng bef or e t henormal r eti r ement age w t h a reduced l i f et i me annui t y Aprer eti r ement spouse' s annui ty must be avai l abl e i f a de-ceased worker was el i gi bl e f or ear l y r eti r ement , was w t h i n10 year s of t he pl an' s nor mal r eti r ement age, and had beenmar r i ed at l e as t 1 year . The mni mumannui ty i s t he amountt he spouse woul d have r ecei ved i t t he worker had r e t i r e dj ust bef ore deat h w t h ear l y r eti r ement benef i ts and hadel ect ed a j oi nt- and- survi vor opt i on . (The normal r eti r ementage i s t he poi nt at which t he empl oyee coul d r e t i r e andi mmedi at el y recei ve a pensi on w t hout r educti on due t o age .The normal pensi on i s t he annui t y avai l abl e at normal r e-t i r ement age i f t he j oi nt- and- survi vor annui ty i s wai ved. )

The 1974 l aw has had a s i gni f i cant ef f ect on potenti alprotecti on accor ded spouses of acti ve workers . I n t he summer of 1970, 36per cent of 149maj or pensi on pl ans provi dedf or annui ti es t o survi vor s of acti ve workers ; vi r t ual l y al lpensi on pl ans st udi ed i n t he 1981 sur vey of f er ed a prere-t i r ement spouse annui ty . `Survivors of ret i rees

As r equi r ed by t he Empl oyee Ret i r ement I ncome Secur i tyAct, al l of t he pensi on pl ans studi ed provi ded f or annui ti est o survi vor s of r e t i r e es . More than 90 percent of f ered thesepost r eti r ement spouse benef i ts i n t he f ormof j oi nt- and-sur-vi vor annui t i es . ' (See tabl e 1 . ) Whi l e ERI SArequi res a pl ant o have a spouse annui ty which pays at l e as t 50per cent oft he ret i ree' s pensi on, other perc entages al so maybe a v a i l -abl e . For exampl e, 68 per cent of t he pl ans provi ded mul t i pl ej oi nt- and- sur vi vor opt i ons r angi ng f rom25 t o 100 per centof t he pensi on pai d pri or t o t he r e t i r e e ' s death, w th a t l e a s tone opti on of . 50per cent or more .The smal l er t he perc ent age opti on sel ect ed, t he l e s s t her educti on i n t he ret i ree' s pensi on . For exampl e, a 25- perc entsurvi vor benef i t would requi re a rel at i vel y smal l r educti oni n t he ret i ree' s pensi on . (A few pl ans provi ded t he 25-per cent survi vor benef i t w t h no r educti on i n t he ret i ree' s

Tabl e 1 . Prov is i on f or post r eti r ement survi vor annui ty i npri vate pensi on pl ans, medi umand l a rge f i rms, 1981Annui ty Pl ansNumber Percent

T o t a l . . . . . . . . . . . . . . . . . . . . . . . . . . . 914 100J o i n t - a nd - s u r v i v o r a n nu i t y ' . . . . . . . . . . . . . . . . . . . . . . 856 94

Survivi ng spouse receives :50 percent of j oint-and-survivor annui ty . . . . . . . 202 22More than 50 percent of j oint- and-survivor annui ty . . . . 33 4Reti ree's choi ce of multi ple j oint-and-survivor opti ons2 . 621 68

Share of r e t i r e e ' s pensi on3 . . . . . . . . . . . . . . 34 4J o i n t - a nd - s u r v i v o r a n nu i t y p l u s p or t i o n o f r e t i r e e ' s pensi on . . 24 3

l An annuit y that provides i ncome duri ng t he i f e t i me of both t h e r e t i r e e and t he survivi ngspouse . The accrued pensi on w i l l be reduced at r eti rement because of t he l onger ti met h a t payments ar e expect ed t o be made . Upon t he r e t i r e e ' s d e a t h , al l or p a r t of t her educed pensi on i s c o nt i n ue d t o t he s u r vi v i n g spouse f or l i f e .2 1 n c l u d e s a t l e a s t one o pt i o n t h a t c o nt i n ue s 50 percent or mor e o f the r e t i r e e ' s r educedpensi on t o t h e s u r vi v i n g spouse .3These p l a n s do not r e q u i r e a r e d uc t i o n o f r e t i r e e ' s accrued pensi on when empl oyeeand spouse a r e t h e same age Under t h ei r provisi ons, t he spouse recei ves an averageof 49 p e r c e n t of t he accr ued pensi on For 2 out of 3 p l a n s i n t h i s g r o u p , the r e t i r e e' sor spouse' s b e ne f i t i s r educed i f t h e r e i s s i g n i f i c a nt age d i f f e r en ce .NOTE : Because of rounding, sum of i ndi vidual percentages may not equal t o t a l s .

pensi on . ) Mul t i pl e opti ons thus provi de al ternati ves whichmght meet t he needs of a mar r i ed coupl e f or ei ther a hi gheri mmedi ate benef i t t o t he ret i ree and spouse or a hi gherbenef i t l a t e r t o t he surv i v ing spouse . The f or mer al ternati vemght be sui tabl e i f an empl oyee i s i n good heal th or i f t hespouse has a separate pensi on Whi l e t he 100-per cent s u r -vi vor benef i t woul d requi re a greater r educti on f or t he r e-t i r e e, i t mght be a more desi rabl e choi ce f or an empl oyeei n poor heal th or w t h alt ernati ve i ncome sources .

A though ERI SA al l ows f or a r educti on i n t he r e t i r e e ' spensi on t o f i nance t he survi vor ' s annui t y, 4 percent of t hepl ans st udi ed of f er ed t he survi vor benef i t w thout t h i s r e-ducti on . Gener al l y, these pl ans were i n ef f ect pr i or t o t hel a w s enactment and were conti nued because t h ei r provi -si ons met or exceededERI SAst andar ds . Another smal l groupof pl ans ( 3 percent) gave spouses a port i on of t he r e t i r e e ' spensi on pl us a j oi nt- and- sur vi vor benef i t cal cul ated on t hebal ance of t he pensi on '

As di scussed e a r l i e r , a j oi nt- and- sur vi vor annui ty adj ustst he ret i ree' s pensi on downward t o provi de a l i f eti me benef i tt o t he survi v i ng spouse . Pensi on payments expect ed t o bemade dur i ng t he l i f et i me of t he ret i ree and t he surv i vi ngspouse approximate the pl an' s t o t a l payments i n a s t r a i ght -l i f e annui t y t o a s ingl e pers on

I f an empl oyee i n a pl an w th j oi nt-and-survi vor protec-t i on does not wai ve t h i s cover age, t he empl oyee' s pensi oni s automati cal l y r educed at r eti r ement t o al l ow f or t he spouse' sbenef i t . The reduced pensi on i s cal cul ated i n t he f o l l ow ngmanner . Anemployee' s accr ued pensi on i s f i r s t det erm nedas i f i t were payabl e onl y duri ng hi s or her l i f et i me . (Thebenef i t f ormul a usual l y cal l s f or mul t i pl y ing t he number ofyears of servi ce by ei t her a per cent of ear ni ngs or a f l a tdol l ar amount . ) The accr ued pensi on benef i t i s t hen adj usted

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MONTHLY LABORREVIEWApr i l 1984 a Survi v i ng Spouse' s Pensi on Benef i t st o pay f or t he s urv i vor a nnu i t y . Thi s adj ust ment t akes ac-count of t he age and sex of t he empl oyee and spouse i n 55percent of t he pl ans, andage al one i n 45 percent . However ,a r ecent SupremeCourt deci s i on prohi bi t s di s cr i m nat i on i npensi on a nnui t y payments basedon sex . As aresul t , pensi onp l ans nowmayhave t o el i m nat e consi derat i on of sex whenadj ust i ng t he accr ued pensi on t o pay f or a spouse' s a nnu i t y . IAc tuar i a l andar i t hmet i c adj ust ment s . O pl ans t h a t madean adj ust ment , 8percent used an ari t hmeti c r educt i on method Under hi s method, r e t i r e e s r eta i n asomewhat l arger shareof accrued pensi ons t han under an actu ar i al l y reduced an-nui t y . Anar i t hmet i c r educt i on i s det erm ned mai nl y by t hedi f f erence i n age of t he r e t i r e e and spouse . Aa si c r educ-t i o n , such as 10 percent , i s t aken t o pay f or a 50- per centspouse annui t y i f t he spouse i s a t l e as t as ol d as t he empl oyee; an addi t i onal r educt i on, such a s 0 5 percent , commonl y s a ppl i ed f or eachyear of age di f f erence i f t he spousei s younger . Some pl ans use t he same ar i t hmet i c r educt i onf or al l ret i rees w t h t he j oi nt - and-surv i vor op t i on i f t he agedi f f erence i s l e s s t han 10 year s . Actuar i a l r educt i ons, foundi n 92percent of t he p l ans w t h adj ust ment s, ar e morec l os el yl i nked t o l i f e expect anci es of t he empl oyee and spouse ;f ormul as ar e based on such f ac tors as age and sex of t heempl oyee and spouse '

Summari es of pensi on p l a n prov i s i ons i l l u s t r a t e t he ef -fects of act uari a l and ar i t hmet i c adj ust ment s . An a i r l i n e ' spensi onp l a n provi des an exampl eof he 50- and 100- per centj oi nt - and-surv i vor opt i ons, w t h act uari a l adj ust ment s vary-i ng by age and sex. ' The f ol l ow ng tabul at i on shows t hepercent of t he empl oyee' s nor mal , s t r a i g h t - l i f e pensi on t h a ti s pai d i n a oi nt- and-survi vor annui t y whi l e both r e t i r e e andspouse ar e al i ve and after t he r e t i r e e di es . I t assumes r e-t i r ement at age 65 . 10

Percent of normal pensionpai d under-50- per cent op t i on 100-per cent opt i onE

Empl oyee age65 and-Wfe age :

mpl oyeeSur v i v i n gspouse Empl oyeeSurv i v i ngspouse

65 . . . . . . . . . . . . 85 . 5 42 . 75 74. 7 74. 760 . . . . . . . . . . . . . 81 . 9 40 95 69. 3 69. 3Husbandage :65 . . . . . . . . . . . . . 93. 3 46. 65 87. 5 87. 560 . . . . . . . . . . . . . 90. 6 45 . 30 82. 9 82. 9When a mal e empl oyee and hi s spouse ar e both age 65

at r eti r ement , t he 50-per cent opt i on r educes t he benef i t t o85. 5 percent of hi s computed normal pensi on ; t h i s provi dest he w fe w t h an a nnui t y of hal f t h a t amount after hi s deat h .I f t he 100-percent opt i on i s el ect ed, t he empl oyee' s benef i ti s reduced an addi t i onal 10 . 8 percent age poi nt s ( t o 74 . 7per cent ) t o pro vi de t he w f e w t h t he same a nnu i t y as t here t i ree' s af t er hi s deat h . However , i f t he w f e i s 5 year s

younger , t he empl oyee' s benefi t i s f ur t her r educed by 3 . 6percent age poi nt s under t he 50- per cent opti on and 5. 4 per-cent age poi nt s under t he 100-percent opt i on . I n t he samepl an, t he corr espondi ng pensi ons f or a f emal e empl oyee ar el arger because of t he shorter l i f e expect ancy of men I not her wor ds, t he husband i s l e s s l i k e l y t o out l i ve hi s w f eand t hus r ecei ve a spouse' s pensi on

Af t er t he r et i r ee' s deat h, t he spouse conti nues t o r ecei vet he samemonth y a nnu i t y under t he 100- per cent opt i on, butha l f of t he month y a nnui t y under t he 50-per cent opt i on .Because t he normal pensi on was reduced t o pay for thespouse' s benef i t , a w f e Aho i s 5 year s younger t han anempl oyee r e t i r i n g a t age 05 w th t he st andard 50- per centj oi nt -and-surv i vor op t i on can expect a spouse' s benef i t of40 95 per cent of t he normal pensi on . As ur v i v i ng husband,under si m l ar condi t i ons, woul d recei ve 4. 35 percent agepoi nts moreAarge manuf act ur i ng company pl an, w t h a 55-per centj oi nt -a nd-s urv i vor opt i on, provi des a t ypi cal example of anar i t hmeti c adj ust ment v ar yi n g onl y by age When bot h t heempl oyee and spouse ar e age 65, t he empl oyee' s pensi oni s reduced by 10 per cent t o pr ovi de t he spouse w t h anann ui t y of 55 percent of t he reduced pensi on . Thus, t he 55-per cent opt i on woul d yi el d a spouse annui t y equal t o 49 . 5percent of t he empl oyee' s nor mal , s t r a i g h t - l i f e pensi on (90percent x 0 55) . However , i f t he spouse' s age i s l e s s t hanthat of t he empl oyee, t he empl oyee' s pensi on i s r educed anaddi t i onal 0 5 percent age poi nt f or each year t he spouse i syounger than age 65 . Ther ef ore, a spouse 5 year s youngerthan t he empl oyee woul d recei ve 48. 125 percent of t heempl oyee' s normal , s t r a i g h t - l i f e pensi on (87. 5 per-cent x 0. 55) . Thi s pl an' s ar i t hmet i c adj ust ment i s l e s s thanwhat woul dbe requi r ed actu ar i al l y ; on aver age, r et i r ed cou-pl es t aki ng t he j oi n t - and-surv i vor op t i on can expect t o c o l -l e c t s l i ght l y more over thei r l i f et i mes t han i f t hey ref use t heop t i on .Rest orat i on t o ul l pensi on Under most p lans, the r e t i r e e' sbenef i t i s permanentl y reduced t o provi de a spouse' s ben-efi t-even i f t he spouse di es f i r s t . Only about 3 percent ofp l ans w t h j o i nt -and-surv i vor benef i t s provi ded f or a "pop-up" or restorat i on of al l or part of t he amount of r educt i onMost of t hese restorati ons f o l l owed t he pattern negoti atedby t he Uni t ed Auto Workers, i n whi ch he "pop-up" benef i tconsi sts of a restora t i on t o 100 percent of t he s t r a i g h t - l i f eann ui t y upon t he spouse' s deat h . Oher p l ans provi ded aschedul e of restorati ons based on he l ength of t i me betweenr eti r ement and deat h of t he spouse, f or exampl e, compl et erestora t i on i f t he spouse' s deat h i s w t h i n I year of r e t i r e -ment , but decr easi ng t he restored amounts over t he next 3year s unt i l a 25- per cent restora t i on i s r eached .Survivors of act i ve workers

Annui ty provi s i ons f or spouses of empl oyees who di ewhi l e s t i l l at work di f f er fromt hose app l i cabl e t o sur vi vor s26


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of r e t i r e d empl oyees . Aensi on pl an' s preret i r ement spouse' sbenef i t gi ves a survi ving husband or w f e a part of t heannui t y ear ned by an act i ve empl oyee at t he t i me of deat h .Al though pr ovi si on for t h i s benefi t was f ound i n vi r t ual l yal l of t he pl ans st udi ed (909 of 914 pl ans), sur vivors werepr otected onl y i f t heempl oyee had att ai ned the r equi r ed ageand had t he necessar y l ength of servi ce a t t he t i me of death(and had el ected t h i s cover age i f , a s descri bed bel ow therewas an extra empl oyee cost f or t h i s pr otecti on) . I n mostpl ans, empl oyees had to qua l i fy f or ear l y r eti r ement ( gen-eral l y age 55 w t h 10 or 15 year s of ser vi ce) bef ore thei rspouses were el i gi bl e f or survi vor' s cover age . However ,mnimumage r equi r ement s at t i mes weremore l i b e r a l t hanf or ear l y r eti r ement .The f o l l ow ng tabul at i on shows t he number and per centof pl ans and t he mnimumage r equi r ement f or act i ve work-

ers bef or e sur vi vi ng spouses coul d r ecei ve benef i t s :Number PercentPl ans speci f ying amnimumage requir e-

ment . . . . . . . . . . . . . . . . . . . . . . . . . . 909 100. 0Younger age than for ear l y r eti r ement 198 21 . 7Same age as f or earl y reti r ement . . . . . . 688 75. 6O der age than for ear l y r eti r ement . . . . 19 2. 1No provi si on f or ear l y r eti r ement . . . . . 4 . 4Apl an w th more l i b e r a l age r equi r ement s than for ear l yr eti r ement may, never t hel ess, r equi r e t he same l ength ofser vice as f or ear l y r eti r ement . For example, a pl an maypr ovi de a spouse' s pensi on i f death occur s at any age w t h10 year s of servi ce, al t hough ear l y r eti r ement i s a t age 55w t h 10 year s of servi ce. Asmal l number of pl ans hadager equi r ement s f or t he spouse' s benefi t more st ri ngent t hant hose f or ear l y r eti r ement . Thesepl ans perm tt ed r eti r ement

more t han 10 year s bef ore t he normal age but l i m t ed t hespouse' s annui t y coverage t o per sons whose age was w t hi n10 years of normal r eti r ement , as al l owed by ERI SA .Method of cal cul a t i ng benef i t s . The basi s for det er m ni ngt he amount of t he pr er eti r ement spouse' s annui t y di f f eredsubstant i a l l y among pl ans . ( See t abl e 2 ) The domnantmethod, found i n 73 per cent of t he pl ans, was der i ved fromt he j oi nt - and- sur vi vor mode of payment . Three- f i f ths of t hepl ans pr ovi ded t he spouse w t h 50 per cent of t he ear l y r e-t i r ement j oi nt - and- survi vor annuit y . Al though t he r educti onf or ear l y r eti r ement vari ed w del y, a r educti on of 4 t o 6per cent a year was common. Thus, t he accrued pensi on ofan empl oyeewhodi es 1 0 year s bef ore normal r eti r ementcoul d be reduced by 40 t o 60 per cent bef ore t he spouse' sbenef i t i s computed . The net ef f ect of ( l ) fewer year s ofser vice due t o an earl y deat h, ( 2) r educti on i n benefi t s duet o ext ended year s of payment associ ated w t h ear l y r e t i r e -ment , ( 3) a f urt her r educt i on because of t he j oi nt - and-sur vi vor - based annui t y, and ( 4) taki ng hal f of t he resul t antbenefi t as t he survi vor ' s shar e l eaves t he spouse w t h asmal lport i on of t he normal s t r a i g h t - l i f e pensi on. Ten per cent oft he pl ans gave t he spouse more than 50 per cent of t he ear l y

Table 2 Provi si on f or prer eti r ement survi vor annui ty i npr i vate pension pl ans, medi umand l a rge f i rms, 1981Annui t y' Pl ansNumber Percent

T o t a l . . . . . . . . . . . . . . . . . . . . . . . . . . 914 100Prer ef rement s u r v i v o r a n n u i t y p r o vi d ed . . . . . . . . . . . . . . 909 99

J o i n t - a n d - s u r v i v or - t y pe a n n u i t y z . . . . . . . . 667 73Based on earl y ret i rement benefi t3 . . . . . . . 634 70S ur v i v i n g spouse r e c e i v e s :50 percent o f empl oyee pensi on . . . . . . . . . . . . . 547 60At a d d i t i o n a l empl oyee c o s t 4 . . . . . . . 198 22

5 1 t o 99 percent of empl oyee$ensi on . . . . . . . . . 35 4A t a d d i t i o n a l empl oyee cost . . . . . . . . . . . . . . 2 ( 5)100 p e r c e n t o f empl oyee pensi on . . . . . . . . . . 52 6A t a d di t i o n a l empl oyee cost 4 . . . . . . . . 5 1

Based on normal r e t i r e me n t b e n e f i t s . . . . . . . . . . . . . 33 4S u r v i v i n g spouse r e c e i v e s50 percent o r l e s s o f empl oyee pensi on . . . . . . . . 33 4At addi ti onal empl oyee cost4 . . . . . . . . . 9 1P o r t i o n of accrued empl oyee b e ne f i t . . . . . . . . . 228 25Reduced f or earl y ret i rement . . . . . . . . . . . . . . . . 121 13Unreduced f or earl y ret i rement . . . . . . . . . . . . . . . . 88 10Based on servi ce projected t o nor mal ret i rement age . . . 19 2Other a n n u i t y c . . . . . . . . . . . . . . 14 2

No p r e r e t i r e me n t s u r v i v o r a n n u i t y p r o v i d e d' . . . . . . . . . . . 5 1' Many p l a n s o f f e r an e l e c t i v e p r e r e t i r e me n t spouse o pt i o n . I f t he e l e c t i v e p r o vi s i o nwas t he o n l y o p t i o n , i t was a b ul a t e d ; i f i t was i n combi nati on w t h an a u t o ma t i c p r e -t i r e me n t spouse o pt i o n , o n l y t h e a u t o ma t i c p r o vi s i o n was t a b ul a t e d3The spouse annuit y i s computed as i f t he empl oyee had r e t i r e d w t h a j oint-and-survivor annui ty ; that i s, the accrued pensi on i s f i r s t reduced because of t he l ongerl e n gt h o f t i me t h a t payment s wer e expect ed t o be made t o bot h t he r e t i r e e and t hes u r v i v i n g spouse . The spouse' s s h a r e i s t h e n t h e s p e c i f i e d p e r c e n t of t he reduced amount3Survi vor annui t y i s based ont he benef i t t he empl oyee would have recei ved i i earl yret i rement had occurred on t he date of death .4 P I a n r educes t he accruedempl oyee pensi on b en e f i t f or each yea r s u r v i v o r p r o t e c t i o n

i s i n f o r c e .' Less t han 0. 5 percent .' Survivor annuit y i s based on t he benef i t t he empl oyee would have recei ved i f e l i g i b l ef or normal r e t i r e me n t on t hed a t e of d e a t h .

I n c l u de s a n n ui t y based on a p e r c e n t of average monthl y e a r n i n g s , or a f l a t d o l l a ramount8A p r e r e t i r e me n t s u r v i v o r a n n u i t y i s r e q u i r e d by E R I S A o n l y i f p l a n s a l l o w t he paymentof r e t i r e e b e n e f i t s p r i o r t o t h e pl a n ' s normal r e t i r e me n t age.NOTE : Because of roundi ng, sum of i ndi vidual percentages may not equal t o t a l s .

r et i r ement j oi nt - and- survi vor annui t y, w t h 6 per cent pro-vi di ng al l of t he reduced benefi t . Another smal l group ofpl ans ( 4 per cent ) w t h j oi nt - and- survi vor - based annui ti esmade no r educt i on for ear l y r ecei pt of benef i t s, even i f t heempl oyee di ed pri or t o t he nor mal r eti r ement age .The ai r l i ne pl an di scussed earl i er i s anexampl e of a pl angi vi ng the spouse 50 per cent of t he ear l y r eti r ement j o i n t -and- survi vor annui t y f or which t he empl oyee was el i gi bl eon t he dat e of death . Thi s pl an' s earl y r et i r ement f ormul ar educes benef i t s ari thmeti cal l y f or each year t h a t r eti r ementprecedes age 62, usi ng three age bracket s and r educti onsr angi ng from2. 4 per cent t o 6. 6 per cent per year . For ex-ampl e, an empl oyee' s ear l y r eti r ement benefi t a t age 55 i s59. 8 per cent of t he pensi on payabl e at age 62 w t h t he sameyears of ser vice . Thi s pensi on i s f urt her reduced by 10 . 1per cent t o pay f or t he j oi nt - and- sur vi vor opt i on . As a r e s u l t ,anempl oyee ret i r ing a t age 55 w t h a 50-per cent j oi nt- and-

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MONTHLYLABORREVEWApri l 1984 Sur vi vi ng Spouse' s Pensi onBenefi t ssur vi vor annui t y would r ecei ve a pensi on equal t o 59 . 8percent x 0 899, or 53 . 7 percent of t he accr ued pensi on.Theref ore, i f t h a t acti ve empl oyee di ed a t age 55, t he spouse' smonthly annui t y would be hal f of 53. 7 per cent , or 26. 9percent of t he s t r a i g h t - l i f e pensi on t hat t he empl oyee hadaccr ued, and a smal l er per cent of t he normal pensi on . Thi sbenefi t would be f ur t her adj ust ed up or down f or any d i f -f erences i n ages between empl oyee and spouse .

One-f our t h of t he pl ans provi ded a preret i r ement sur vi vorbenefi t cal cul at ed a s a port i on of t he empl oyee' s accr uedpensi on benef i t , but w t h no r educt i on f or j oi nt - and- sur vi vorcoverage . These pl ans, however, var i ed i n method of de-t erm ni ng accrued pensi on benef i t s . The l ar gest group r e-duced t he empl oyee' s accrued benefi t f or earl y r eti r ement ,a s i f r et i r ement hadoccurred on t he dat e of death . Anothergroupmade no r educt i on f or earl y r eti r ement andcomputedbenef i t s as i f t he empl oyee qual i f i ed f or normal r eti r ementbenef i t s on t he dat e of death . Afewpl ans based benef i t son t he years of servi ce t he empl oyee would have accumu-l at ed had he or she l i ved t o normal r eti r ement age

The more generous methods of determ ni ng accr ued ben-e f i t s , however, typi cal l y used smal l er percent ages t o c a l -cul at e t he spouse' s shar e of t he pensi on . Formul as basedon t he employee' s act ual year s of ser vi ce, reduced f or earl yr eti r ement , on average, pai d spouses 55 per cent of t he ac-crued empl oyee benefi t . Those based on act ual year s ofservi ce but w t h no earl y ret i r ement r educt i on averaged 53per cent , whi l e f ormul as t h a t proj ect ed servi ce t o t he normalr eti r ement age averaged 46 percent . Nevert hel ess, t he s u r -veyed pl ans w t h more l i b er a l approaches t o cal cul ati ngaccr ued benef i t s general l y provi ded hi gher annui t i es t o t hespouse . Except f or empl oyees who di e w t hi n a year or twoof normal r et i r ement age, t he ef f ect of hi gher cal cul at edaccr ued benef i t s outwei ghed t he relati vel y smal l r educt i onsi n t he spouse' s shar e of empl oyee pensi ons .Pl ans payi ng a desi gnated port i on of t he accr ued empl oyee benefi t t o t he survi vi ng spouse al so were l e s s l i k e l yt o adj ust t he benefi t because of di f f erences i n age betweent he empl oyee andspouse . Whi l e t hej oi nt - and- survi vor - basedf ormul as al most al ways r educed t he pensi on actuari al l y f oreven smal l di f f erences i n age, two-f i ft hs of t he pl ans w t hot her f ormul as made no adj ust ment a t al l . Many of t heremai nder used an ar i t hmeti c approach, r educi ng t he pay-ment by l e s s t han t he actuar i al t echni ques ; f r equent l y, t hesepl ans onl y made a r educt i on i f t he age di f f erence was moret han 3 t o 5 year s .

Twenty-one per cent of t he pl ans st udi ed off ered asecondmethod of cal cul ati ng prer eti r ement sur vi vor' s annui t i es . I na l i m t e d number of pl ans ( 3 per cent ) , spouses who qual i f i edunder t he second f ormul a r ecei ved an annui t y equal t o t hesumof t he amount s cal cul at ed under both f ormul as . I n t hemaj or i t y of cases, t he secondary method of cal cul at i on wasan al ternati ve f ormul a, t o be used i f i t of f ered a hi gherbenefi t t han t he pri mary formula I n some cases, t he a l t e r -nat i ve f ormul as were i n ef f ect pri or t o enactment of ERI SA

andprovi ded ahi gher benefi t t o persons w t h l onger servi ce.Other al t ernat i ve f ormul as offered a hi gher benefi t at empl oyee cost as a subst i t ut e for the aut omat i c coverage . I ISome exampl es of al t ernati ve prer eti r ement spouse ben-e f i t provi si ons are :

0 I nstead of aut omati c 50- per cent j oi nt - and- survi vor- basedcoverage, an empl oyee may chooseand pay f or a l argerport i on of hi s or her accr ued benefi t .

" When an empl oyee r eaches a speci f i ed age such a s 60,

at he spouse' s annui t y i s computed based on a normal ,rather t han earl y, r eti r ement f ormul a .Survi vi ng spouses of empl oyees covered by t he pensi onpl an pr i or t o enactment of ERI SA i n 1974 may choosea f ormula based on t he empl oyee' s accr ued pensi on .When an empl oyee di es w th fewyear s of servi ce, t hesurvi vi ng spouse r ecei ves a mni mumannui t y of 20perc ent of t he l a s t month' s pay .

The f i r s t three exampl es are common ; t he f ourt h i s r a r e .Cost t o empl oyees . Under ERI SA, t he cost of t he pre-r et i r ement sur vi vor annui t y may be borne by part i ci pant s ;t he pensi on benefi t t hey would ot herw se have r ecei ved atearl y or normal r eti r ement may be reduced f or each yearspouse' s protecti on i s i n ef f ect . When t h i s charge i s l evi ed,coverage i s not aut omat i c . I n t h i s i nst ance, unl i ke postr e-t i r ement sur vi vor annui t i es, workers desi ri ng t he coveragemust el ect i t . Pl ans may requi re a choi ce no l a t e r t han 2years pri or t o i t s ef f ecti ve dat e, t hus avoi di ng di spropor-t i onat e use by empl oyees w th termnal i l l nesses .

Twenty-four percent of t he pl ans l evi ed t h i s charge ; t heypermanentl y reduced t he pensi on benef i t s ul t i mat el y pai d t oei t her a survi vi ng spouse or ret i ree i f prer eti r ement survi vorprotecti on was el ected by t he empl oyee . A ypi cal cost i s0. 6 percent of accr ued benef i t s f or every year t he sur vi vorannui t y pr ovi si on i s i n ef f ect pri or t o t he empl oyee' s deathor r eti r ement . I f an empl oyee whochose t o provi de pre-r eti r ement sur vi vor coverage at age 55 r e t i r e s at age 65, t hepensi on i s aut omati cal l y r educed by 6 percent (10 x 0 6per cent ) . I f t he empl oyee di es a t age 60 w t h t he sur vi vorprovi si on i n effect, t he spouse' s pensi on i s reduced by 3percent .Lump- sumand l i m t e d payments

As noted, subst ant i al l y al l of t he pensi on pl ans st udi edprovi ded f or both prer eti r ement and post r et i r ement l i fet i mesur vi vor annui t i es . Amnor i ty of t he pl ans (27 per cent )i ncl uded death benefi t provi si ons f or survi vi ng spouses-l ump-sumpayments and monthly payments f or a l i m t e dti meper i od . Twel ve percent of t he pl ans gave death benef i t st o spouses of acti ve workers ; 21 perc ent cover ed t hose ofret i red workers . Pl ans negot i ated under col l ecti ve bar gai n-i ng agreements, whi ch accounted f or near l y a th i rd of t hesampl e, had death benefi t provi si ons more f r equent l y t hannonnegot i ated pl ans . (See tabl e 3 ) For acti ve worker s, ne-

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Table 3 Col l ecti ve bargai ni ngstatus of pri vate pensi onpl ans w t h death benefi ts, mdi umand l arge f i rms, 1981Covered by Not covered byc o l l e c t i v e c o l l e c t i v e

B en e f i t b a r g ai n i n g b a r g ai n i n gagreements agreementsNumber Percent Number Percent

P o s t r e t i r e me n t pl ans . . . . . . . . . . . 282 100 632 100Death b e ne f i t s . . . . . . . . . . . . . . . 99 35 89 14I n a dd i t i o n t o s ur v i v o r s ' a nn u i t i e s 31 11 45 7I n l i e u o f s u r v i v o r s ' a nn ui t i e s . 68 24 44 7No death b e ne f i t s . . . . . . . . . . . . 183 65 543 86

P r e r e t i r e me n t p l a n s . . . . . . . . . . . . . 282 100 632 100Death b e ne f i t s . . . . . . . . . . . . . 50 18 58 9I n addi ti on to survivors' annui ti es 13 5 14 2I n l i e u of survivors' annui ti es 37 13 44 7No death b e ne f i t s . . . . . . . . . . 232 82 574 91

goti ated pl ans were t w ce as l i k el y t o have t h i s benefi t ( 18comared w t h 9 percent ) ; the ratio was even hi gher f orreti red workers ( 35 comared w th 14 percent) .The maj ori t y of pl ans w th death benefi t s of f ered suchbenef i ts as al ternat i ves t o an annu ty-9percent of the pl ansgave t h i s opti on t o spouses of deceased acti ve workers and12 percent t o survi vor s of reti rees . ( See tabl e 4. ) Afewexaml es are :

" The surviving spouse of a worker el i gi bl e f or earl yreti rement benefi t s can choose eit her a smal l mnthl yannu ty f or l i f e or a much l arger mnthl y paymnt f or5 years .

" The surviving spouse of a worker not yet el i gi bl e f orearl y reti remnt automti cal l y receives t he death ben-e f i t .

" The survi vi ng spouse of a reti ree who wai ved a oi nt-and- survi vor annui t y s t i l l recei ves a l um-sumbenefi t .The remaining pl ans w th death benef i t s provi ded such ben-Table 4 Type of benef i t i n pri vate pensionpl ans w thdeath bene i t s , mdi umand l arge f i rms, 1981

Prereti rement P o s t r e t i r e me n tB en e f i t b e ne f i t b en e f i tNumber Percent Number Percent

T o t a l p l a n s . . . . . . . . 914 100 914 100Pl ans w th deat h benef i ts . . . . . . . . 108 12 188 21Deat h benefi ts i n addit i on t o survivorannui ty . . . . . . . . . . . . . . . . 27 3 76 8Lump sum . 22 2 53 6Speci fi ed peri od of monthl yb e n e f i t s ' . . . . . . . . . . . . . . . . 5 ( z ) 23 3Deat h benef i t i n l i e u of survi vorannui ty . . . . . . . . . . . . . . . . 81 9 112 12Lump sum . . . . . . . . . . . . 39 4 16 2S pe c i f i e d p e r i o d of monthl y 1 1benefi tsl . . . . . . . . . . . . 42 5 96P l a n s wi t h o u t d e a t h b e ne f i t s . 806 88 726 79' For t he postret i rement b e n e f i t , t he numer of annui ty payments al ready recei ved byt he empl oyee i s counted i n t he s p ec i f i e d peri od, p o t e n t i a l l y l eaving t he spouse w th nod e a t h b e ne f i t . For t he p r e r e t i r e me n t b e n e f i t , the v a l u e o f the monthl y payments may betaken i n a l um sumi n a mnori ty of p l a n s ,LLess than 0. 5 percent .NOTE Because o f r o u n d i n g , sum of i n d i v i d u al percent ages may no t e qua l t o t a l s .

e f i t s i n addi ti on t o an annu ty-persons not el i gi bl e f or anannui t y recei ve onl y t he death benefi t . Threepercent of t hepl ans st udi ed provi ded bot h a death benefi t andan annui t yf or preret i rement , and8percent provi ded f or post reti r ementbenef i t s . The maj ori t y of these pl ans pai d a l um sumEl i gibi l i t y for benef i t s . Death benef i t e l i g i b i l i t y requi re-ments di f f ered f or deaths bef ore and a f t e r reti rement . Spousesusual l y qual i f i ed f or a post reti rement death benefi t i f t hereti ree hadmt the pl an' s mni mumrequi r ement s for ' a pen-si on . Three percent of the pl ans, however, had a mrerestri ctive r equi r ement ; they speci f i ed mni mumage andservi ce r equi rement s, commnl y age 55 w t h 10 years ofservi ce. ( These pl ans di d not cont ai n a mni mumnormalreti rement age, al l ow ng reti rement a t any age a f t e r , f orexampl e, 30 years of servi ce. )Ageand servi ce e l i g i b i l i t y requi r ement s f or preret i rementdeath benef i t s vari ed w del y ; mst pl ans pai d benefi t s t o asurvi vi ng spouse even i f the eml oyee di d not meet r e -qui r ement s f or provi di ng a survi vor annui t y . Fr equent l y,t he death benefi t was pai d regardl ess of age or years ofservi ce . The f ol l ow ng tabul at i on shows age and servi cee l i g i b i l i t y requi r ement s f or prereti r ement death benef i t s :

Numer PercentTotal . . . . . . . . . . . . . . . . . . . . . . 108 100

Less age or servi ce or both t han f orearl i est pension . . . . . . . . . . . . . . . . . 81 75No requi rement . . . . . . . . . . . . . . . . . 38 35Wth r equi r ement . . . . . . . . . . . . . . . 43 40Sam age and servi ce as f or earl i estpensi on . . . . . . . . . . . . . . . . . . . . . . . . . . 17 16More age or servi ce or both t han f orearl i est pension . . . . . . . . . . . . . . . . . . 10 9Pl ans w t h l ower age and servi ce requi rement s than t hosef or the e a r l i e s t pensi on mst f requent l y provi de a deathbenefi t i f t he eml oyee di es af ter 10 year s of servi ce, r e -gardl ess of age .Amunt of benef i t s . Theval ue of the death benef i ts di f f eredsharpl y amngt he pl ans i n t he sampl e . Most of t he l um-sumbenef i t s were speci f i ed as f l a t dol l ar amunts . Themstcommonamunt was $1, 000, al t hough som pl ans pai d asmuch as $10,000 The amunt vari ed by type of benefi t ,averagi ng sl i ghtl y hi gher f or prereti rement t han f or post re-t i rement death benef i t s, and hi gher f or benef i t s i n addi ti ont o , rather t han i n l i e u o f , survi vor annui t i es . Not al l pl ansspeci f i ed a f l a t l um-sumamunt : a fewcal l ed for payi nga speci f i ed amunt f or each year of servi ce, averagi ng $48per year ( or l e s s t han $1, 000 f or 20 years of servi ce) . Ei ghtpl ans provi ded a percent of average annual earni ngs, t y p i -cal l y 35 percent ( for exampl e, $5, 250 f or average earni ngsof $15,000) .

I f , i nstead of l um-sumpayments, death benef i ts are d i s -tr i buted i n the formof mnthl y payments, each paymnt sl arger t han t h a t provi ded by a survi vor' s annui t y ; mnthl y

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MONTHLYLABORREVEWApri l 1984 o Sur vi vi ng Spouse' s Pensi onBenef i t sdeath benef i t s equal t he f u l l monthl y pensi on payment t owhich an acti ve worker or reti ree was enti tl ed . However ,monthl ydeathbenef i t s are pai d f or a l i mt ed per i od . Amongt he pl ans sur veyed, survi vi ng spouses of acti ve workersr ecei ve t he payment f or an average of 71 mont hs . Sur vi vor sof reti rees al so r ecei vepayments f or an average of 71 mont hswhen t he monthly payment i s of f er ed i n l i e u of a spouse' sannui t y, but 66months when i t i s i n addi t i on t o an annui t y .For reti rees, however, t he number of monthly pensi on pay-ment s t h a t have been made dur i ng the reti ree' s l i fet i me wasdeducted f romt he speci f i ed number of deat h benef i t pay-ment s . Thus, i f t he reti ree l i ves l onger t han t he speci f i edper i od and t he deat h benef i t was chosen i n l i eu of an annui t y,t he spouse woul d recei ve no payment . I f t he deat h benef i ti s i n addi t i on t o t he spouse' s annui t y, t he survi vor' s paymenti s not reducedt o t he spouse' s share of t he worker ' s pensi onu nt i l al l of t he speci f i ed deat h benef i t payments have beenmade .Oher survi vor' s benef i t s

Al though onl y a m nor i ty of t he pensi on pl ans provi dedl ump-sumor monthl y deat h benef i t s, most of t he f i rms cov-ered by t he study provi ded si m l ar protect i on t o survi vorsof acti ve workers through l i f e i nsurance . I n 1981, 96percentof t he employees i n t hese f i rms had a l i f e i nsurance pol i cypai d a t l e as t i n part by t he empl oyer-81 per cent had pl ansf ul l y pai d by t he employer . Three-f i f ths of t he empl oyeesw t h l i f e i nsurance had coverage basedon earni ngs-ben-e f i t s usual l y equal edoneor two t i mes ear ni ngs . Most of t heremai ni ng empl oyees had a f l a t dol l ar amount of l i f e i n-surance, seldomover $15,000and f r equent l y under $5, 000 .Product i on workers were more l i kel y t han whi t e- col l ar empl oyees t o have l at dol l ar coverage . Ret i r ees al so f r equent l yhademployer-provi ded l i f e i nsurance coverage . Three-f i f thsof t he employees were i n l i f e i nsur ance pl ans t h a t cont i nuedt o pr ovi de coverage af ter r eti r ement , al t hough al most al waysf or a reduced amount . 1 2

Soci al securi t y i s anot her source of i ncome f or manysurvi vi ng spouses . I f there ar e no dependent chi l dren, a

survi vi ng spouse age 65 or ol der can recei ve 100 perc entof t he empl oyee' s soci al securi t y benef i t s . Benef i t s maybegi n as earl y as age 60, but are reduced 5. 7 per cent f oreach year under age 65 . Because soci al securi t y does notpay dual benef i t s, sur vi vor s may not drawon thei r ownaccounts and al so recei ve survi vor' s benef i t s f romt he sys-tem but must choose one of t he payments . Regardl ess ofage, a survi vi ng spouse w t h dependent chi l dren can recei ve75 per cent of t he empl oyee's soci al securi ty benef i t unt i lt he youngest chi l d r eaches age 18 or marr i es. Each depen-dent c hi l d al so r ecei ves 75 percent of t he empl oyee' s benef i tt o age 18, or 22 i f i n school , subj ect t o f a m l y maxi mum .Benef i t s ar e curt ai l ed i f t he spouse r emarr i es . 1 3Added pr ot ect i on pr oposed

Si nce t he enactment of t he Empl oyee Ret i r ement I ncomeSecur i t y Act of 1974, al l pri vate pensi on pl ans have i ncl udedsome type of provi si on f or survi vor' s benef i t s . Al l pl ansnowof f er post r eti r ement sur vi vor protecti on and nearl y al lof f er prer eti r ement protect i on . But t he sur vi vi ng spouse canl ose t hese benef i t s i f : ( 1) t he acti ve worker di es pri or t or eachi ng e l i g i b i l i t y f or t he spouse' s benef i t , ( 2) t he acti veempl oyee had not el ected a prer eti r ement spouse' s annui t yof f ered at addi t i onal employee cost, ( 3) t he coupl e does notmeet t he 1-year mar r i age r equi r ement , or (4) the j oi nt- and-sur vi vor annui t y was waivedby t he empl oyee at r eti r ement .Ai l l approved by t he Senat e i n 1983 woul d provi deadded protecti on f or survi vi ng spouses of r e t i r e es by pro-hi bi t i ng t he empl oyee fromwai vi ng a j oi nt - and-survi vorannui t y opti on unl ess t he spouse approved . 14 The 21- per centof t he pl ans studi ed t hat pr ovi de post r eti r ement deat h ben-e f i t s part i al l y f i l l t he gap l e f t by a waiver of t he spouse' sannui t y, but t he degr ee of protect i on may be l i m t ed . Thi sb i l l al so affects sur vi vors of acti ve employees : a key pro-vi si on woul d requi re t he payment of survi vor' s benef i t s t oa spouse i f aworker age 45 hadat l e as t 10 years of servi ce .However, i n some cases, onl y a smal l vested pensi onmayhave accrued and, a f t e r act uari al adj ust ment , a survi vi ngspouse woul d recei ve mni mal monthly payments . 0

FOOTNOTES

' The Empl oyee Ret i r ement I ncome Securi ty Act of 1974 ( ERI SA) requi rest hat i f an empl oyee made contri buti ons t o a pensi on plan, the plan mustprovi de f or r eturni ng the part i c ipant' s accumu ated contri buti ons, w thi nterest, i f death occurs bef ore r eti r ement .

' The survey i s conducted i n a sampl e desi gned t o r epr esent al l pr i vatesector establ i shment s i n t he United States, excl udi ng A aska andHawai i ,employi ng at l east 50, 100, or 250 worker s, dependi ngon the i ndustr yI ndustry coverage i ncludes mni ng ; constr ucti on; manufacturi ng trans-port ati on, communi cati ons, el ectri c, gas, and sani tary servi ces ; whol esal eand r e t ai l t rade; f i nance, i nsurance, and real estate ; and sel ected servi cesFor addi ti onal deta i l s on t he sur vey, seeEmpl oyee Benefi ts i n Medi umandLargeFi rm, 1981, Bul l et i n 2140 (Bureau of Labor Stati sti cs, 1982) . Seealso Robert Frumi n and Wll i amWatr owski , "Bureauof Labor Statist i cst akes anew ook at employee benefi ts, " MonthlyLabor Review August1982, pp 41-45

' Deri ved frompension plan summari es i n D gest of Sel ected Pension

Pl ans, 1970 Edit i on ( Bur eau of Labor S t a t i s t i c s , 1971) .' Empl oyee Benef i ts, tabl e 41 . ERI SA i s not t he onl y source of l egalr equi r ement s concerni ng survi vor benef i t s . I nternal Revenue Servi ce rul -

i ngs l i m t f avorabl e taxt r eatment t o pension pl ans i n which deathbenef i t sare inci dental t o thei r pri mary purpose For addit i onal detai l , see Everet tT Al l en, J r . , J oseph V Mel one, and J er r y S Rosenbloom Pensi onPlanni ng, 4th Ed i t i on (Homewood, I l l . , R chardDI r w n, I nc . , 1981) ,pp 83-89 andDnM McGl l , Fundamental s of Pr i vate Pensi ons, 4thEd i t i on (Homewood, 11 1 . R chardD I r w n, I nc . , 1979) , pp 124-26 and149-61 .

s I t shoul d benotedthat some pension plans provide benef i t s t o bot h t hespouse andmnor chi l dren or, i n theabsence of a spouse, t o mnor chi l drenor other dependents . Such benef i ts f or chil dren general l y end at age 18 or21 .

"These pl ans, found i n t he st eel i ndustr y, provi de t he survi vor w th 50percent of t he retir ee' s pension l ess 50 percent of t he spouse' s soci al

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secur i t y benefi t , pl us an amount equi val ent t o a 50- percent spouse benef i tbasedon a j o int- and-surv i vor annui ty computed on t he remaininghal f oft he r e t i r e e' s pension Mnimumpayments ar e provi ded f o r the l a t t e r cal -cul at i on .

' I n a J ul y 1983 deci si on (Nathal i e Norri s vs . State of Ari zona), theSupreme Court proh bi tedemployer-provi ded pensi onplans fromadj usti ngannui ty payments on the basis of sex . A though t h i s deci si on requi res useof a singl e actuari al tabl e to compute unreduced monthly annui ti es formal e and femal e empl oyees, i t s rati onal e may al so apply to annui ty r e-ducti ons t o pay f or survi vor benefi ts . See "Devel opments i n I ndus t r i a lRelati ons," Monthl y Labor Revi ew Sept ember 1983, p 36

' Ef f o r t s t o e l i mnate cons i derat i on of sex i n actuari al adj ust ment s i n-votves the three branches of government . I n addi t i on t o therecent SupremeCourt decis i on, t here have been proposal s f or l eg i s la t i ve changes . Forexampl e, a b i l l which prohi b i t s sex di sc r i mnat i on i n both pensi ons andi nsurance has been re i ntr oduced i n t he House of Repr esentat i ves ; acoun-terpart b i l l has been rei ntr oduced i nt o t he Senat e . The US . Departmentof J u s t i c e recentl y stated i n abr i e f f i l e d w t h t he SupremeCourt hat pensi onbenefi ts basedon sex are di s c r i mnato ry .

' Summary plan descr i pti ons used here f or i l l us t ra t ive purposes ar e avai l -abl e fromt he Labor Department' s Labor Management Servi ces Admn-i s t ra t i on f i l e i n Washi ngton, DC . , i n accordance w t h t he r equi r ements ofERI SA The pl ans used here were current as of March 1982 .

"' Employees i n t he plan can r e t i r e w t h unreduced benef i ts at age 62 .However, age65 i s used i n t he exampl e f or compari son w t h t he subsequentsummary of a plan froma manufacturi ng f i r m

" Tabul ati ons of the types of secondary f ormulas and thei r age andserv ce requi rements are avai l abl e f romthe authors

' z Empl oyee Benefi ts, tables I , 28, 29, 30, and31 ."For amore detai l ed descr i pt i on of social secur i ty ' s survi vor benef i tssee Soci al Secur i ty Program i n t he United St ates ( SSA) 73-11915 (U S .

Department of Heal t h, Educat i on, and Wel f are, Soci al Secur i ty Admn-i st rat ion, 1973)

"Thi s proposed b i l l , "The Ret i r ement Equi t y Act, " HR . 2769, wouldpl ace several more str i ngent r equi r ements on pension pl ans . I n addi t i on t othose menti oned i n thi s a r t i c l e , t he b i l l address es such topics as e l i g i b l i t yf or par t i c ipat i ng i n a pensi on plan, vesti ng, and br eaks i n servi ce

Thefuture of marri ageI f women move i n t o t he l abor f orce i n i ncreasi ng numbers and gai n a

more f avored posi t i on i n t he occupati onal structure, t h i s wi l l tend t o un-dermne t he t radi ti onal di vi s i on of l abor w t h i n t h e househol d and t hei nter dependence t h i s speci al i zat i on i mpl i es Marr i ages basedoneconomcconsi derati ons al one w l l gi ve way The u t i l i t a r i a n basi s of marr i age wi l lbe er oded, and l ove, compani onshi p, and perhaps chi l dren, w l l becomet he onl y reasons f or mai ntai ni ng a part i cul ar rel at i onshi p . These mar r i agesare l i k el y t o be l e s s stabl e t han marr i ages i n t he past , al t hough those t hatdo endure wi l l probabl y pr ovi de greater sat i s fact i on t o t he part i ci pant s t haneconom cal l y mot i vat ed and soc ia l l y constr ai ned al l i ances .

-KRSTINA MOOREANDI SABEL V SAWH LL,"Impl i cati on of Wmen's Empl oyment for Home and Faml y Li fe,"

i n Patr i c ia Voydanoff , ed , Work andFaml y: Changing Rol es of MenandWmen ( Pal o Al to , Cal i f . , Mayf i el d Publ i shi ng Co . , 1984) , p . 156

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Surviving Spouse's Pension Benefits