PAX Centurion - January / February 2013

Page 42 • PAX CENTURION • January/February 2013 617-989-BPPA (2772) Massachusetts Public Employees Guide to Survivor Benefits - Option D For Public Employees who became members prior to April 1, 2012 If amember dies before retiring, can themember provide for payment of a lifetime allowance to a surviving family member? Members have the right to choose what is called an "Option D beneficiary" upon becoming amember or at any point prior to retirement. OptionDprovides a designated beneficiary with an allowance for life. However, if the member does not designate anOptionDbeneficiary and if his or her eligible spouse does not elect to receive a lifetime allowance, themember's accumulated deductions will be paid in a lump sum to the beneficiary or beneficiaries he or she has designated to receive a return of the amounts in the member's annuity account, and no lifetime allowance will be paid.An exception to this is if a member dies survived by minor children, which will be discussed more fully below. Who may a member designate as his or her Option D beneficiary? Membersmay designate only oneOptionDbeneficiary. The eligible benefi- ciaries are limited to amember's spouse, themember's former spouse (provided he or she has not remarried at the time of being designated as the Option D beneficiary), the member's child, parent, or sibling. Even if not nominated, an eligible spouse may elect to receive this benefit upon the death of his or her spouse. The right of election by a spouse is discussed more fully below. May a member change his or her Option D beneficiary designation? Amembermay change his or herOptionDbeneficiarydesignationbygiving written notice on a prescribed form to his or her retirement board.Members are encouraged to revisit the selection whenever they wish, and particularly when major life events such as death or divorce occur. Changes in personal circum- stances do not automatically alter the designation. The Option D beneficiary remains the same until a newbeneficiary is designated in the prescribedmanner on a prescribed form. Can a beneficiarymake any "make-up" payments that amember had been eligible to make? If a member's accumulated deductions do not reflect all of the member's service towhich he or she is entitled, themember'sOptionDbeneficiary has 90 days in which to make any "make-up payments" to establish a more complete record of creditable service. However, a beneficiarymay not buy back veteran's service to which the member might have been entitled. Does a member have to designate an Option D beneficiary? No, there is no requirement that amember designate anOptionDbeneficiary. If a member does make such a designation, they may retract it at any time by giving written notice to his or her retirement board. Underwhat circumstances is amember'sOptionDelectionsuperseded? An Option D designation has a serious and lasting legal impact unless: • A member cancels it; or • A member's designated beneficiary predeceases the member; or • A member retires; or • A member's surviving beneficiaries are eligible to receive an accidental death benefit; or • A member's eligible surviving spouse elects to receive a benefit, even if the member did not choose the spouse as his or her Option D beneficiary. How is the amount of an Option D benefit calculated if a member dies before his or her 55th birthday? The designated beneficiary is entitled to receive the Option C allowance the member would have been entitled to receive if the member had attained age 55 and retired on the date he or she died. The number of years of service that the member had been granted when he or she died plus any service for which the beneficiary makes a "make-up" payment will be used in the calculation. What age factor is used for the beneficiary when amember dies before becoming 55? The beneficiary's age factor is also increased, by the number of years necessary to bring the member up to age 55. For example, Jack Jones dies at age 49, and his wife Mary is 45. The age factor used for Jack will be 55, or an increase in 6 years. Mary's age factor will also be increased by 6 years, in this case resulting in an age factor of 51. What is the Option D benefit if a member's death occurs on or after his or her 55th birthday? The designated beneficiary is entitled to receive the Option C allowance the member would have received if the member had retired on the date he or she died. Under what circumstances may a member's spouse elect to receive Option D benefits? Amember's spouse may elect to receive Option D benefits if the following conditions are met: 1. The member dies as a member-in-service and has not nominated any Option D beneficiary, or has nominated someone other than the spouse as an Option D beneficiary; and 2. Themember has beenmarried to the spouse for at least one year and dies as a member-in-service with at least two years of creditable service; and 3. The member was living with the spouse at the time of death, or, if they were living apart at the time of death, it must be for a justifiable cause other than the spouse's desertion or moral turpitude. How and when may a member's spouse elect Option D benefits? The retirement board will notify a member's spouse of his or her right to elect OptionDbenefits.Aspouse has 90 days fromthe date this notice ismailed to elect Option D benefits. To be effective, the election must be made on a prescribed form filed with the retirement board within this period. What happens if a surviving spouse does not elect Option D benefits? If the member had not named another individual as his or her Option D beneficiary, the member's accumulated deductions would be paid to the sur- viving beneficiaries of record or, if there are none, to the member's surviving spouse in one sum. If the member had named another individual as his or her Option D benefi- ciary, that individual would receive a lifetime allowance (instead of a lump sum payment of accumulated deductions being made to the surviving beneficiaries of record). If designated as an Option D beneficiary on the prescribed form, may a spouse opt not to take the allowance? No. If any eligible person (spouse, former spouse who has not remarried at the time of option selection, child, mother, father, brother or sister) is named as an Option D Beneficiary, they must take the allowance. No disbursement of the member's accumulated total deductions may be made if a beneficiary is nominated under Section 12(2)(d). If a member has already retired, is there a circumstance in which the surviving spouse could elect to receive Option D benefits? If the member dies within 30 days of retirement without having selected Option C, the spouse can elect to receive Option D benefits. The member must be living with his or her spouse at the time of death or if the couple is See Option D on page 43