Benefits Payable Upon Your Death
Pensions For Survivors If You Die After Retirement

Spouse's Benefit
If you are married at the date of your retirement, your pension will be reduced automatically by 10% in order to provide an income for your spouse in the event that he or she lives longer than you do. Your pension will be restored to the full amount as of the first of the month following your divorce, annulment, or your spouse's death. If you should remarry, payment is made to the new spouse only if you were married at least 12 months before the date of your death, or if you are the parent of a child born of the current marriage. You may elect not to have reduction apply, in which case no income will be payable to your spouse from the Retirement Plan upon your death. You may elect to have the reduction apply to only part of your benefit (except in the case of disability retirement, which must be 100% of the base), in which case the benefit for your spouse will be reduced.

Your spouse's benefit is payable starting the first of the month following the date of your death (or if you dies on the first of the month, that date) and continuing for the remainder of your spouse's life, unless your spouse remarries before age 60. If your spouse's remarriage ends through divorce, annulment or death, your spouse may qualify for reinstated benefits upon repayment of any lump sum death benefits he/she received.

The amount of the spouse's benefit is 55% of your pension under the formula (or 55% of the portion of your pension to which you elected to apply the spouse's benefit, if you choose the base to be less than 100% of your pension).

Example Of A Survivor's Annuity

If You Retire at Age 61, and Your Spouse is Age 56

The amount used in determining your spouse's annuity is $1,800 if you die after attaining age 62. The spouse receives 55% of $1,800, or $990 annually (subject to cost-of-living adjustments)

If you take Voluntary Early Retirement and are also disabled for Social Security disability income purposes at the time you retire, and if you are still eligible for the Social Security Benefit at the time of your death (should it occur before you are age 62), your spouse's benefit will be immediately reduced by 55% of the Social Security offset which is applied to your pension. However, this is true only if your spouse is eligible for immediate payment of a widow's or widower's Social Security Benefit. Otherwise, because of the Social Security offset the reduction will be delayed and applied when your spouse becomes eligible at age 60.

Whenever Worker's Compensation is payable, there is a limit on the spouse's benefit. (See Workers' Compensation in the Explanation of Terms, page 28).

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Benefit For Child or Other Named Survivor

If you are unmarried at retirement and, in the even of your death, want to provide income to a child or other person to whom you have an obligation, you can voluntarily choose to have your pension reduced to provide such income. The reduction will be 10% of your pension, plus 5% for each full 5 years by which you are older than your named survivor, but not more than 40% of your pension.

The benefit is payable starting the first of the month following the date of your death (or if you die on the first of the month, that date) and continues for the remainder of your named survivor's life.

Example of a Child's Annuity

You Retire at Age 62

*Example only for purpose of illustration

You can choose more than one child to receive equal shares of income after your death, in which case the reduction for the age difference between you and the children will be based on the average age of the children. When a named survivor dies, whether before or after your death, that survivor's benefit is eliminated rather than made payable to the remaining named survivors.

If a named survivor dies before you die, the amount of the reduction will be restored on the first of the month following the death of the named survivor.

Another Example of a Child's Annuity

You Retire at Age 60

In this case you receive a Temporary Annuity of $3,000 payable until age 62. This Temporary Annuity is not affected by your election of a survivor's annuity for a child.

The 40% reduction, as computed in the previous example, applies only to your Permanent Annuity of $2,000. Therefore, you receive a Permanent Annuity of $1,200 for life, plus a Temporary Annuity of $3,000 until age 62. The named survivor's annuity will be limited to $660 annually.

*Example only for purpose of illustration.

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Benefit If You Marry or Remarry After Retirement

If you marry or remarry after retirement, you can voluntarily elect, within one year of your marriage, to have a reduction in your pension. This is in order to provide your new spouse with future income from the plan if he or she lives longer than you do. If you were married at the time of retirement, you can do this for a subsequent spouse only in the same percentage that you elected for the first spouse.

The percentage your future pension will be reduced is 10% plus an added percentage based on the length of time you have already been receiving your pension (not counting time when your pension was reduced for a survivor annuity). This added reduction is ½% for each year or part of a year for the first 5 years, 1% for each year or part of a year for the next 5 years, and 2% each year or part of a year thereafter. For example, if you married after being retired on full pension for 10 full years, the reduction would be 17 ½% (10% plus 2 ½% for the first 5 years plus 5% for the next 5 years). The amount and duration of the spouse's benefit is the same as for the spouse's benefit described earlier, i.e., 55% of your pension determined under the formula.

If, as an unmarried person, you elected a benefit for a child, children or other person and later marry, you can elect within one year of your marriage to have a spouse's benefit in place of your previous election. an appropriate adjustment in the reduction of your benefit will be made.

Special Rules for Disability Benefits

Special rules apply to a survivor's benefit if you receive a disability benefit.

1. You cannot choose a reduced spouse's benefit. It must be the full benefit or nothing.
2. You cannot elect a survivor's benefit for someone other than a spouse.
3. Under the spouse's benefit, the 10% reduction for coverage applies before your benefit is reduced by Social Security disability benefits.
4. Your surviving spouse's benefit will be 55% of the amount you were entitled to receive before the offset for Social Security disability benefits was applied. The amount of your spouse's Social Security widow, widower's or mother/father income benefit (excluding children's benefits) will then be subtracted, with this exception: During the period your surviving spouse is not eligible to receive Social Security Benefits because he/she is employed, and under age 60, the surviving spouse's benefit will not be reduced.
5. When your surviving spouse reaches age 60 a Social Security offset equal to the Social Security Benefit that would have been payable if your spouse had been age 60 at the time of your death will always be applied.

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Adjustment If Your Marriage Ends or Your Spouse Dies

Before the adjustment in your pension is discontinued, proof of the dissolution of your marriage or your spouse's death is required. No adjustments for death, divorce or annulment will be applied before January 1, 1975.

Adjustment If Your Named Survivor Dies

Before the adjustment in your pension is discontinued, proof of the death of your named survivor is required. No adjustments for death will be applied before January 1, 1983.

Important Note

No changes can be made in your election of a survivor's benefit once you retire unless you marry or remarry, or unless your named survivor dies before you do. Therefore, it is very important that you consider your election carefully.

Pensions for Survivors If You Die While Employed

If you die during the period when you are employed by AAFES and are making contribution to the Retirement Plan, one of these three death benefits will apply:

1. If Eligible for Retirement (Except Optional Early Retirement)

   If you meet one of the following sets of requirements --

   • You are age 62 or more with 5 or more years of Credited Civilian Service,
   • You are age 50 or more with 20 or more years of Credited Civilian Service, or
   • You are any age with 25 or more years of Credited Civilian Service,

     provided you are married on the date of your death, then your spouse may be eligible for a lifetime annuity, if he/she does not remarry before age 60. This annuity will be determined as though you had retired on the day before your death and as though the survivor's benefit (see page 18) were applicable.

2. If Not Eligible for Retirement, Or If You Are Only Eligible for Optional Early Retirement

   If you are not eligible for retirement, but qualify for Optional Early Retirement,

   and

   • You have at least 18 months of Credited Civilian Service at your death,

   and

   • You have been married at least one year or are the parent of a child born of the current marriage,

     -- then your surviving spouse may be eligible to receive a pension for life (or until remarriage, if this occurs before age 60). During the period before your surviving spouse reaches age 60, the amount of the pension will be offset by the widow or widower's or mother/father's benefit that your spouse can receive from Social Security (excluding children's benefits), unless the Social Security Benefits are not being paid because your spouse is working. This could result in your spouse not receiving any income under the AAFES plan, if Social Security pays a substantial benefit.

     The amount of the spouse's benefit before the Social Security offset is 55% of your pension determined under the formula, but not less than 55% of the smaller of the following two amounts:

     • 40% of your High-3 Average Compensation, or
     • The pension benefit determined under the formula, but with your Credited Civilian Service increased by the number of years between the date of your death and age 60.

     If Workers' Compensation is payable to your spouse, there is a limit on the amount payable from the Retirement Plan. (See Workers' Compensation in the Explanation of Terms, page 28).

3. Lump Sum Death Benefit
   • Payment of any lump sum due will be made to your spouse if you die while you are an active employee, or otherwise, to your designated beneficiary.
   • Any balance remaining to your credit, after all persons to whom pension income under the plan is payable have died, will be payable to the designated beneficiary in a lump sum.
   • You have the opportunity to sign a "Designation of Beneficiary" form at the time you become a retirement plan participant. You should check your beneficiary choice from time to time to be sure that it still reflects your wishes. You can file a new form at any time.

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Cash Settlement of Small Pensions

If your pension is less than $240 a year, you may be paid a cash settlement instead of a pension.

Future of the Plan

AAFES hopes and expects to continue the Retirement Plan indefinitely. Every effort has been made to design the Plan so that it will meet future condition. To protect employees and the employer against unforeseen conditions, the right to change or discontinue the Retirement Plan is necessarily reserved by AAFES. Changes to, or discontinuance of the Retirement Plan will not affect the retirement pension pad to you from your contributions and contributions made by AAFES for you before the date of such change or discontinuance, except in order to meet the requirements of the Internal Revenue Service of the United States.

Your Rights Under the Plan

1. This Plan is not a contract and does not give you any job rights, or any right, or claim to a retirement benefit unless the right to such benefit has been specifically earned by you under the terms of the Plan.
2. Your contributions, and AAFES's contribution toward Plan costs, are held by investment counselors, banks, and insurance companies, in accordance with legal contracts. These legal contracts govern the investment of Plan assets and payment of Plan benefits.
3. Unless otherwise provided by law, the benefits under this Retirement Plan are not assignable. But if your employment ends, you may elect to have your contribution with credited interest, that are otherwise returnable to you, assigned to another party.

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