December 2001 legislation established an "initial minimum amount" which yields, in effect, a widow(er)'s tier II benefit equal to the tier II benefit the employee would have received at the time of the award of the widow(er)'s annuity, minus any applicable age reduction. It does this by adding a "guaranty amount," initially set at 50% of the employee's tier II, to the 100% tier I and 50% tier II benefits provided under prior law. The "initial minimum amount" is computed as if it applied on the widow(er)'s annuity beginning date and is not increased for cost-of-living adjustments.
This "guaranty amount" is reduced each year by the dollar amount of the cost-of-living increases payable in both the tier I and tier II benefits provided under prior law. Consequently, the widow(e)'s net benefit payment will not increase until the annuity, as computed under prior law, exceeds the annuity computed under the intial miniumum amount formula.
The widow(er)s' guaranty provision applies to all widow(er)s entitled to a tier II effective February 1, 2002. If the annuity beginning date is before February 1, 2002 the increase due to the "intial minimum amount" maybe zero, because of previous cost-of-living adjustments.
If a widow(er) is also a railroad employee annuitant and both the widow(er) and the deceased employee started railroad emplyment after 1974, only the railroad retirement employee annuity or the survivor annuity, whichever is larger, is, in effect, payable to the widow(er) unless the smaller annuity is chosen.
Each child received 15% of the deceased employee's tier II amount, and each surviving parent received 35%. The minimum total tier II amount payable to a family is 35% of the employee's tier II amount, and the maximum, 130%.
A tier II benefit is not payable for a surviving divorced spouse or a remarried widow(er). A tier II benefit is not payable to surviving parents if other family members may receive benefits or if the parent has remarried.