A: The retirement law of Massachusetts (M.G.L., Chapter 32) regulates your retirement allowance and allows you to receive the payment of a monthly retirement allowance by choosing one of the three options listed below:
- Option A: This option provides for a lifetime retirement allowance to the retiree. This retirement allowance would cease upon the death of the retiree. The beneficiary would receive only the pro-rated portion of the last month’s retirement allowance.
- Option B: This option provides for a lifetime retirement allowance to the retiree. Typically, this retirement allowance is about 1% less than the Option A retirement allowance. In addition, upon the death of the retiree, this option provides for a lump sum distribution of the retiree’s annuity, if any, to the named beneficiary of the retiree. On average, a retiree’s annuity will last 10-12 years into retirement. If the retiree dies within those 10–12 years, the named beneficiary will receive a one-time lump sum distribution of any funds remaining in the retiree’s annuity savings account, if any. If the retiree dies after that 10- 12 years, the named beneficiary will receive only the pro-rated portion of the retiree’s last retirement allowance. * Note: There are no restrictions on who or how many individuals or entities may be named as the beneficiary.
- Option C: This option, commonly referred to as the joint and last survivor allowance, provides for a lifetime retirement allowance to the retiree. On average, the retirement allowance that the retiree receives is approximately 9-11% less than the Option A retirement allowance. Upon the death of the retiree, this option provides for a lifetime retirement allowance to a named beneficiary in the amount of 2/3 of the retiree’s Option C retirement allowance. If the named beneficiary should pre-decease the retiree, upon the date of death, the retiree will “pop-up” to his/her Option A retirement allowance. * Note: Beneficiary must be the member’s parent, sibling, child, spouse or former spouse who has not remarried.
If you are married, your spouse must accompany you so that he/she can be informed of your options and your option choice. If this is not possible, a form will be forwarded to your spouse informing them of the option that you have chosen and the estimated retirement allowance under each of the three options. Payments of a retirement allowance are made, via direct deposit, on the last business day of each month.