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What is a Second Election?

August 30, 2023

          Each month, I try to bring some tidbit of valuable information that may or may not directly impact your planning. This month, I'd like to talk about the "second election". For those participating in the FRS Pension Plan, you have the opportunity to do a second election and turn your future income stream into a lump sum that is rolled directly into the FRS Investment Plan. 

          At first glance, this may seem undesirable because, in the Investment Plan, YOU bear all of the investment risk and forfeit a lifetime of guaranteed income. But here's an example of why someone may choose to do the second election...

          Let's say a participant has been in the FRS Pension plan for their entire career and is suddenly diagnosed with a chronic illness that will impact their life expectancy. If they were to die prematurely, there would be no benefits payable to their children once pension benefits begin (assuming they weren't disabled) and the pension income would be lost for everyone. If, on the other hand, they had done the second election, the net present value of the entire pension would be rolled into the Investment Plan and it's your money to do with as you choose. You can also leave it to whomever you choose. The second election is not a choice to consider lightly, but in the right circumstance, it could make a lot of sense. For more Tips and Strategies, check out one of our upcoming workshops at