TSP cash refund feature?

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How much is annuity reduced with the cash refund feature and why?

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Asked on July 31, 2017 9:11 pm
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The reduction for the cash refund feature is not great. By using the “retirement income calculator” on the TSP website you can see what the cost would be in your situation. As an example, if you were age 57 and spent $150,000 for a joint annuity with a 50% survivor feature, the reduction in your annuity would be $12 per month at today’s interest rate index.
The “why” is because a cash refund feature obligates MetLife to refund the unused purchase price if the annuitant dies before receiving the amount of their purchase price back in annuity payments. This will cost the insurance company more overall, so they assess a charge for it.

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Answered on August 1, 2017 12:39 pm