The next chapter in the ongoing saga of the City of Knoxville pension plan involves death benefits. There are over 400 city employees who have designated a beneficiary other than a spouse, and the vast majority of them are a child.
Employees who choose a lifetime annuity for children are a concern and the city may look at adjusting that benefit since it might be a long-term threat to the pension plan.
The list of employees with death benefits to children includes both Mayor Madeline Rogero’s deputy mayors, though neither is in the lifetime annuity category that is causing concern.
Deputy Mayor Christi Branscom is not vested in the pension plan yet and her benefit would be the same as if she left the city—she gets back what she had put in with 4 percent interest.
Deputy Mayor Bill Lyons is vested and has selected two children as beneficiaries of his death benefits. Lyons chose the 10 Year Certain and Life plan, in which the clock starts upon his retirement. If Lyons were to die within 10 years of his retirement, his death benefits would be split between his two children for a time-limited period of up to 10 years. Pension Board records show a monthly death benefit of $2,690.82 per month, divided by the two children.
Death benefits are affected by the age of the beneficiary only in those cases where someone selects a lifetime annuity. The 10 Year Certain and Life plan, for example, factors in time and the age of the employee, but not the age of the beneficiary, since it’s a set time period.
Rogero is looking at cases where employees choose a lifetime annuity and she wants to do away with inter-generational lifetime annuities. With a lifetime annuity, should a vested employee die before retirement, the death benefit could run out 50 to 70 years