Single Life Annuity. This is a stream of equal payments lasting as long as you are alive. This does NOT mean that the Company purchases an annuity from an insurance carrier on your behalf. When you pass away, no further benefits are paid. The Single Life Annuity is the starting point for all other forms of payment. Each one uses this as the baseline, adjusting and converting as necessary.

Ten Year Certain Annuity. This is also a stream of equal payments but it does have a guarantee. If you should die before the annuity has made 120 payments, your named beneficiary would receive the balance of those payments up to the 120 payment. After that, no further benefit is available. This annuity is slightly less than the Single Life Annuity because it must account for the difference in your life span and your beneficiary’s life span. Translation: You get less money while you are alive to have the guarantee of 10 years of payments and passing them on to a beneficiary.

50 Percent Joint & Survivor (J&S) Annuity. The Single Life Annuity is reduced for the difference between your age and the age of your spouse. Under this Retirement Plan, the reduction is 0.6 percent for each year that s/he is younger than you are. If s/he is older, no reduction applies. Most other plans use an actuarial table, which reduces the benefit much more than 0.6 percent per year difference, which is why the Pilots Defined Benefit Plan 50 percent J&S is considered ‘highly subsidized’. When you die, your spouse receives a benefit equal to 50 percent of what you were receiving when you were alive. These payments continue until the spouse dies or remarries.

There is a variation on this annuity called a 50 Percent Contingent Annuity which gives a 50 percent benefit to a non-spouse but it is reduced using the normal actuarial tables. In order to be considered as your spouse, you must have been married for one full year prior to retirement. Note: The 50 Percent J&S is different from the Qualified Pre-Retirement Spousal Annuity (QPSA).

The QPSA is elected at age 35 or after marriage and protects your spouse with 50 percent of your retirement benefit if you die prior to retirement. The 50 percent J&S protects your spouse after you have retired.

66-2/3 Percent Contingent Annuity. The Single Life Annuity is again reduced actuarially to account for the difference in life spans of yourself and your beneficiary. When you pass away, your beneficiary receives a payment equal to 66-2/3 percent of what you were receiving.

100 Percent Contingent Annuity. The Single Life Annuity is reduced actuarially to account for the differing life spans and passes the same benefit on to the beneficiary that the participant was receiving prior to death.

50 Percent Lump Sum, 50 Percent Annuity. Fifty percent of the Single Life Annuity is converted into a lump sum payment using an interest rate factor (Pension Benefit Guarantee Corporation Immediate Rate for Valuing Lump Sums) and considering your remaining life span. The remainder is paid in the annuity of your choice—either Single Life, 10 Year Certain, 50 Percent J&S or Contingent, 66-2/3 Percent Contingent, or 100 Percent Contingent. The lump sum may be rolled over into an IRA to avoid any taxation or penalty. The lump sum has certain restrictions: The Treasury bill rate must be above 7.4 percent for anyone other than an age 60 retiree to get a lump sum (except under the ERIP), you must provide a letter from your doctor stating that you have "no known terminal illnesses" within 90 days of your retirement, and the lump sum cap must not have been exceeded prior to your retirement.

100 Percent Lump Sum. Your Single Life Annuity is completely converted into a lump sum payment, which can be rolled over into an IRA or other qualified plan. No further payments are then made from the plan. Again, the same restrictions apply as are listed under the 50/50 option above.

75 Percent Lump Sum, 25 Percent Annuity (only available under the ERIP Program). Seventy-five percent of your Single Life Annuity is converted to a lump sum payment. The remaining 25 percent is paid in any annuity form that you choose.

You will receive a packet of retirement papers within 90 days of your retirement date. If you are turning 60, this packet should be sent automatically. If you are opting to retire early, you must notify your Chief Pilot’s Office and the Pension Department as soon as you make your decision and the paperwork will follow. Not giving 90-days notice to the Pension Department, however, could delay the payment of your benefit. It takes a bit of work to get your last earnings picture, run a calculation, and put the package together and get it in the mail; so try to anticipate the timing required.

If you are married and choose anything other than the 50 Percent Joint & Survivor Annuity, your spouse must sign a form acknowledging the election and it must be notarized. We’ll revisit this in another article when we discuss the forms package itself.