Phoenix COPERS Options: Six Payment Options, Spousal Consent

Updated October 7, 2026. Quick answer: A City of Phoenix Employees’ Retirement System (COPERS) member chooses one of six monthly payment options at retirement, each paid for life: Straight Life, Option A Standard or Pop-Up (100% survivor), Option B Standard or Pop-Up (50% survivor), or Option C (120 guaranteed payments). The choice becomes irrevocable when the first pension check is paid, and a married member needs signed spousal consent for anything but Option A Standard. A refund of contributions cancels all rights and benefits in COPERS. Tier 3 members can also elect a COLA option for a smaller starting pension.

What this page covers and what it does not

This page works from four City of Phoenix documents for COPERS: the Retirement Guide (updated 7/3/2023), the one-page Retirement Options sheet, the FAQ for retired members, and the Policy Manual (3-5-2026 edition). The options sheet and the FAQ carry no date, so they are cited as read on October 7, 2026. The Policy Manual includes older policies, so the current rules at the Retirement Office decide any actual case.

Rules differ by hire date. The guide labels Tier 1 as “Hired Prior to July 1, 2013”, Tier 2 as “Hired Between July 1, 2013 and December 31, 2015”, and Tier 3 as “Hired on or after Jan. 1, 2016”. Arizona readers can start the state tax question from Arizona retirement taxes, and the system-by-system view is public pension retirement decisions by system.

When a pension can start, and the filing deadline

The guide sets the minimum conditions: “Members are eligible for retirement benefits at age 60 plus ten or more years of service credit; age 62 with five or more years of service credit; or where age and service credits equal 80 for Tier 1 employees and 87 for Tier 2 and Tier 3 employees.”

The filing deadline depends on the route, and the guide cites A.R. 2.441A for it. For the Rule of 80 or Rule of 87 route: “Application for Retirement must be filed with COPERS no later than 14 calendar days prior to Retirement Date.” For age 60 with ten years or age 62 with five years: “Application for Retirement must be filed with COPERS no later than 30 calendar days prior to Retirement date.” Confirm the current notice rules with the Retirement Office before fixing a retirement date.

The election: six payment options and one permanent choice

COPERS says that it “gives you the choice of retirement payment options, any option you choose is paid once per month and is for your lifetime”. The guide lists the same six for all three tiers, and Tier 3 members can add a COLA feature to any of them.

Each reduced option is described by the same sentence on the sheet: “You receive less than the Straight Life Option amount”. The documents read state no reduction as a percentage. For retirements after December 31, 2025 the Policy Manual’s equivalency policy lists “Interest: 7.0% annual compound interest”, which shows the return the conversion assumes but not the reduction for any age pair. Ask the Retirement Office for the figures for each option. For the general trade, see single-life versus joint-and-survivor pension.

What is irrevocable, and what spousal consent requires

The options sheet is direct about timing: “Once an option is chosen, it becomes irrevocable upon payment of your first pension check.” “If you choose a survivorship option, the named survivor choice becomes irrevocable upon payment of your first pension check.”

Marriage changes the default. The sheet calls Option A Standard a “100% Survivorship option, required for all married individuals.” On every other option: “Spousal consent is necessary for choosing any option other than Option A Standard and a signed consent form is required by the Retirement Office.” A married member who wants the largest pension, a 50% survivor benefit, or a pop-up feature therefore has to bring the spouse into the decision in writing.

The pop-up versions answer one risk, the survivor dying first. For the Standard versions the sheet says “If your designated survivor dies before you, your pension benefit does not change; you cannot designate another survivor.” For the Pop-Up versions: “If your designated survivor dies before you, your pension will increase (pop-up) to equal your maximum benefit as calculated under the Straight Life Option.”

What each option does for a survivor, with computed examples

For Option A the sheet says that “after your death, your designated survivor will receive 100% of your pension benefit for the remainder of his/her lifetime”. For Option B it says that “after your death, your designated survivor will receive 50% of your pension benefit for the remainder of his/her lifetime”. A computed example from an assumed $3,000 monthly pension after the option reduction, not a COPERS figure: a designated survivor would receive 100% of $3,000, a computed $3,000 a month, under Option A, or 50% of $3,000, a computed $1,500 a month, under Option B. The reduced amount itself would come from COPERS’s own calculation, which the documents read do not show.

Option C works differently. The sheet says: “This option guarantees that a minimum of 120 monthly payments (10-years) of pension payments will be paid.” “If you die before receiving 120 monthly payments, the remainder of the payments (up to 120) will be paid to your designated beneficiaries.” Unlike A and B: “Unlike Options A or B, you can change your designated beneficiaries at any time.” The guarantee has an end: “If you live more than 10 years after your retirement, monthly pension payments will cease at your death.” A computed example from assumed figures, not a COPERS figure: if a member with an assumed $3,000 monthly pension died after 40 payments, the remainder would be 120 minus 40, or 80 payments, times $3,000, a computed $240,000 paid to the designated beneficiaries.

Straight Life pays the most and protects least: “Upon your death, the pension benefit ceases.” The one safeguard: “If, at the time of your death, you did not receive payments equal to the total of your member contributions existing at the time of your retirement, the difference will be refunded to your beneficiaries of record.”

Post-retirement increases: the Tier 3 COLA option and the PEP

What a pension does after retirement depends on tier. The guide says “Tier 3 members can elect a retirement benefit option that provides a built-in COLA in exchange for a reduced initial pension amount”. The options sheet describes it: “You receive an actuarial reduced monthly pension benefit in order to fund the optional cost of living adjustment (COLA) annually.” Each increase: “The final percentage adjustment, if any, is equal to the percentage increase, not less than zero, in the Phoenix area Consumer Price Index”. The Policy Manual’s factor policy lists, for Tier 3, “2.40% for options with a COLA” as an assumption for retirements after December 31, 2025.

A computed example from assumed figures, not a COPERS figure: if an assumed reduced pension of $2,500 a month received a 2% increase, the increase would be $2,500 times 2%, a computed $50, for a new pension of a computed $2,550. Following the sheet’s own timing, the first payment after the increase would also carry a retroactive increase for January and February, a computed $100, so it would be a computed $2,650, with later payments at $2,550. The documents read give no break-even for the COLA option.

The sheet offers the COLA option to Tier 3 only. For Tier 1 and Tier 2 the FAQ describes the Pension Equalization Program: “The PEP provides for a permanent pension increase.” “Eligible retirees and survivors must have received 36 pension payments as of January 1st of the year being considered.” It adds: “The PEP is not a cost-of-living adjustment (COLA); it is subject to the Plan’s investment performance in excess of 7.5%.” The guide says an increase under the program “may be provided to retirees if sufficient reserves are available at the end of the fiscal year”. The PEP is therefore conditional on investment results, not a promised COLA.

Leaving before retirement: vesting, the deferred pension and the refund

The guide lists vesting for all three tiers as “After 5 yrs of credited service”. One path for a vested member is the deferred pension: “If terminated after 5 yrs service, at age 62 become eligible for lifelong pension.” The other is the refund: “Upon separation from employment, a member or beneficiary not entitled to a pension may withdraw the member’s contribution plus applicable interest.” The consequence: “The acceptance of a refund cancels the individual’s rights and benefits in COPERS.” “Employer contributions to COPERS are not refundable.”

The guide’s refund line reads “100% of all contributions plus any fiscal year end credited interest”. Its summary of Proposition 103 says the measure “limits the interest rate (3.75 percent) applied to contributions refunded to withdrawing members”, so a member should ask the Retirement Office what rate a refund would carry.

The Policy Manual’s interest policy, adopted in 1993, credits interest as of June 30 each year and lets vested separated members time a refund after June 30 to pick up that year’s credit. Payment is not instant either. A refund to someone who has resigned or been dismissed “shall be held up for a reasonable period of time, not to exceed 90 days, from the date a verified and complete refund application is received and termination of employment is confirmed”. A surviving spouse who qualifies for a pension has no such option: “Surviving spouse eligible for a pension cannot opt for a lump sum payment of contributions.” For the general framework, see pension refund versus leaving it.

The decision is larger than the cash. A refund ends the pension claim for that service, and the buyback described below charges the refund back with lost earnings. A member weighing a one-time sum against a lifetime payment can use the pension lump sum versus monthly annuity break-even method.

Taking the refund: rollover, withholding and tax

A refund can be moved rather than spent. The Policy Manual’s rollover rules say: “A refund of accumulated contributions from the system shall be eligible for rollover” to an eligible plan or IRA. The application can split the money: “The amount of Accumulated Contributions to be paid directly to the applicant, rolled over to an IRA or qualified employer plan, or combination thereof.” The remainder paid to the applicant is “subject to all applicable state and federal withholding taxes”.

The guide’s refund row also states the withholding: “20% Federal Tax Withheld 5% State Tax Withheld”. The page on 20 percent withholding on a pension lump sum explains why that matters when rolling over.

A computed example from an assumed $4,000 taxable refund paid out directly, not a COPERS figure: at the 20% federal rate, withholding would be $4,000 times 20%, a computed $800, leaving a computed $3,200 in cash. A member who then wanted to roll over the full $4,000 would need to find the withheld $800 from other money within the IRS rollover window.

The guide says the portion of member contributions picked up by the City is treated as an employer contribution for tax purposes and excluded from the member’s gross income until COPERS distributes it. Whether a given refund is fully taxable depends on facts the documents read do not state, so confirm it with a tax preparer.

Buying back refunded service

A member who took a refund and later returned to City service can restore the forfeited credit. The buyback policy begins: “An active COPERS member who chooses to apply to purchase previously forfeited COPERS credited service must submit a written request to COPERS.” The policy requires an “application fee of $95.00”. It says the amount to repay is the refunded amount plus the plan’s lost earnings from the withdrawal, and it sets a limit: “The repayment period shall be no later than the earlier of the employee’s termination or the employee’s retirement date”.

The policy states an interest rate as of 1991, which is not repeated here as a current number, so request a written cost from COPERS. A computed example from assumed figures, not a COPERS figure: if a buyback cost $20,000 and raised the monthly pension by $150, recovery would take $20,000 divided by $150, a computed 133.3 months, so 134 monthly pension payments to recover the cost. The pension buyback calculator shows the general method.

Buying other service credit

COPERS also lets members buy permissive service credit. The guide’s service purchase row says “Employees must be vested prior to purchase”, and for military service it allows “Non-Intervening Military service w/ honorable discharge. May purchase up to a max 5 yrs service”.

The Policy Manual’s service purchase policy, effective December 1, 2020, requires a member to “have 5 years of credited service with COPERS” and to be “actively contributing to COPERS defined benefit plan” (or in the LTD program). On price: “The cost shall be based on the full Actuarial Cost of providing COPERS benefits for the period of service being purchased.” The actuarial cost is calculated using the member’s last twelve months of retirement applicable salary, and the application carries a “nonrefundable application fee of $95.00”.

Deadlines are tight. “Upon Retirement Board approval, the member will have sixty (60) days to complete the payment by cash, transfer or rollover or initiate a payroll deduction or salary reduction plan.” “Payment for Permissive Service Credit must be completed within (60) days of separation of employment.” The documents read do not say whether purchased credit counts toward the Rule of 80 or Rule of 87.

What the IRS adds on tax

A refund or lump sum from a public pension is a distribution, so the IRS rules apply on top of COPERS’s own. On withholding, the IRS says that a taxable eligible rollover distribution paid to you “is subject to mandatory income tax withholding (generally at a rate of 20%), even if you intend to roll it over later”, and that if you roll it over yourself “you’ll have to add funds from other sources equal to the amount withheld”. COPERS’s own documents say that a refund can be paid directly or rolled over, and that state and federal withholding applies. The rollover clock, if the money is paid to you: “you have 60 days from the date you receive it to roll it over to another eligible retirement plan”.

On early distributions the IRS says “the law imposes a 10% additional tax on certain early distributions from certain retirement plans”. Its list of exceptions includes “Distributions made to you after you separated from service with your employer after attainment of age 55” and “Distributions made to a qualified public safety employee from a governmental plan” if the employee separated from service during or after the year they attained age 50 or 25 years of service under the plan, whichever is earlier. Whether an exception fits a particular refund depends on your own plan and facts, so confirm it with a tax preparer before you take one.

What this page could not settle

• The documents read do not state the size of the reduction for Options A, B or C, or for the pop-up and COLA features, only that each pays less than Straight Life. The member’s own estimate from the Retirement Office is the source.
• The documents read do not describe a deferred retirement option program (DROP), a partial lump sum, or any lump sum at retirement. They describe monthly pensions for life, a refund of contributions on separation, and a lump sum refund to certain beneficiaries.
• The Retirement Guide and the FAQ give different thresholds for the Pension Equalization Program, 8% five-year average return in the guide and 7.5% in the FAQ, and the documents read do not reconcile them.
• The documents read give the Board’s interest formula, the lesser of the investment return used for the last regular actuarial valuation or the five-year average of time weighted returns, never below 0% and capped at 3.75% on member contributions beginning January 1, 2016, but they do not state the specific rate credited for any year.
• The documents read do not say whether purchased service credit counts toward the Rule of 80 or Rule of 87.
• The options sheet and the FAQ carry no date and the guide was updated 7/3/2023, so a newer edition could differ from the ones read on October 7, 2026.
• The Policy Manual’s buyback policy states an interest rate as of 1991, and the documents read do not state the rate now in effect.

Common mistakes

• Treating the retirement option as changeable after retiring; the options sheet says the option and the named survivor become irrevocable upon payment of the first pension check.
• Assuming a married member can pick any option alone; the sheet says spousal consent is necessary for any option other than Option A Standard.
• Taking a refund of contributions without noting that the guide says acceptance of a refund cancels the individual’s rights and benefits in COPERS.
• Confusing the Pension Equalization Program with a COLA; the FAQ says the PEP is not a cost-of-living adjustment and depends on investment performance.

Related on this site: pension refund versus leaving it, single-life versus joint-and-survivor pension, pension buyback calculator, 20 percent withholding on a pension lump sum, pension lump sum versus monthly annuity break-even and public pension retirement decisions by system.

Sources

• City of Phoenix Employees’ Retirement System (COPERS), Retirement Guide (updated 7/3/2023): https://www.phoenix.gov/content/dam/phoenix/coperssite/documents/retirement%20guide%202023.pdf
• City of Phoenix Employees’ Retirement System (COPERS), Policy Manual (3-5-2026 edition): https://www.phoenix.gov/content/dam/phoenix/coperssite/documents/COPERS%20Policy%20Manual%203-5-2026.pdf
• City of Phoenix Employees’ Retirement Systems (COPERS), Retirement Options: https://www.phoenix.gov/content/dam/phoenix/coperssite/documents/copers%20retirement%20options.pdf
• City of Phoenix Employees’ Retirement System (COPERS), Frequently Asked Questions for retired members: https://www.phoenix.gov/content/dam/phoenix/coperssite/documents/frequently%20asked%20questions%20-%20retired%20members.pdf
• IRS, Topic no. 413, Rollovers from retirement plans (irs.gov): https://www.irs.gov/taxtopics/tc413
• IRS, Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs (irs.gov): https://www.irs.gov/taxtopics/tc558

Sources: the primary documents linked above, read on October 7, 2026. General information from each system’s own published materials, not legal, tax or financial advice. Your own member statement and the system’s current rules decide your benefit, and a pension counsellor at the system or a fee-only adviser is the right place to confirm anything consequential.