The TSP, through its annuity provider, offers the following types of annuity options:
- Single life annuity — with level or increasing payments.
- Joint life annuity with your spouse or with someone other than your spouse.
Single Life and Joint Life Annuities
Single life annuity—An annuity that provides monthly payments only to you as long as you live.
Joint life annuity—An annuity that provides monthly payments to you while you and the person with whom you choose to share your annuity (your “joint annuitant”) are alive. When you or your joint annuitant dies, monthly annuity payments will be made to the survivor for his or her lifetime. The amount of the payment while you and your joint annuitant are alive and the amount of the payment to the survivor depend on whether you choose a 100 percent or a 50 percent survivor annuity.
If you choose an annuity that provides for a joint annuitant other than your spouse, the joint annuitant must be either a former spouse or someone with an insurable interest in you. This means that the person is financially dependent on you and could reasonably expect to derive financial benefit from your continued life. Blood relatives or adopted relatives (but not relatives by marriage) who are closer than first cousins are presumed to have an insurable interest in you.
If the person you name as your joint annuitant does not have a presumed insurable interest in you, you must submit an affidavit (i.e., a certification signed before a notary public) from someone with personal knowledge that the named person has an insurable interest in you. The certifier must know the relationship between you and the joint annuitant and must state why he or she believes that your joint annuitant might reasonably expect to benefit financially from your continued life.
Two types of joint annuities are available:
100 percent survivor annuity. The amount of the monthly annuity payment to the survivor is the same as the annuity payment made while both you and your joint annuitant are alive. However, the amount of the monthly payment that you receive while you are both alive is generally less than it would be if you had selected the 50 percent survivor annuity.
50 percent survivor annuity. The amount of the monthly annuity payment to the survivor— whether the survivor is you or your joint annuitant — is cut in half (that is, cut to 50 percent) of the annuity payment made while both you and your joint annuitant are alive.
If you name a joint annuitant other than your spouse who is more than 10 years younger than you, you must choose a joint life annuity with the 50 percent survivor benefit. The only exception is for a former spouse if required by a retirement benefits court order.
Once you have chosen either a single life or a joint life annuity, you must decide whether you want to receive level or increasing payments.
Level payments. The amount of the monthly annuity payment remains the same from year to year. Thus, with a single life annuity, you receive the same monthly payment for as long as you live. With a joint life annuity, you receive the same monthly payment for as long as you and your joint annuitant are alive. The monthly payment to the survivor will depend on whether you have chosen a 100 percent survivor annuity or a 50 percent survivor annuity, but it will remain at the same level for the life of the survivor.
Increasing payments. The amount of the monthly annuity payment can change each year on the anniversary date of the first payment. The amount of the change is based on the change in inflation, as measured by the consumer price index. Increases cannot exceed three percent per year, but monthly annuity payments cannot decrease. When annuity payments start, they are smaller than they would have been if you had selected level payments, but they usually increase each year. Increasing payments can be combined with either the single life annuity or the joint life annuity with spouse. You cannot choose increasing payments when the joint annuitant is not your spouse