Eldridge Bay Retirement System

When you retire, you must choose one of three options under MGL Chapter 32 § 12. The choice is final on the effective date of your retirement — you cannot change it after that — so understand the trade-offs before you elect. If you make no election, your allowance is paid under Option B (§ 12(1)).

All three options pay the same total expected benefit over a typical lifetime. The difference is who gets paid, when, and what happens at your death.

Option A — maximum allowance, no continuation

You receive the largest monthly allowance the formula produces. When you die, payments stop. Your designated beneficiary receives no continuing pension.

Choose Option A if: you have no dependents, your spouse has independent retirement income, or you've made other plans for survivors (life insurance, etc.).

Option B — small reduction, refund of contributions

Option B reduces only the annuity part of your allowance, the part that comes from your own contributions. The pension part is the same as under Option A (§ 12(2)(b)). In return, if you die before you have received, in annuity payments, the value of your accumulated deductions at retirement (your contributions plus interest), the remaining balance is paid to your beneficiary in one sum (§ 12(2)(b)). The guarantee covers your accumulated deductions, not your whole monthly check. Once your payments have reached that amount, the refund-on-death goes to zero, but the reduction in your monthly check stays the same.

Choose Option B if: you want to leave something to a beneficiary but don't need to provide them with continuing income, OR you're early in retirement and want to protect against an unexpectedly short retirement.

Option C — joint and survivor annuity

Your whole allowance, annuity and pension, is reduced. The board sets the amount from factors that use your age and your beneficiary's age. The payments to you and to your beneficiary together are worth the same as the full Option A allowance (§ 12(2)(c)). After your death, your designated beneficiary receives two-thirds of your reduced allowance for the rest of their life.

You may name only one Option C beneficiary, and the choice is irrevocable. If your Option C beneficiary predeceases you, your allowance "pops up" to the Option A maximum for the remainder of your life — this is sometimes called the Option C pop-up.

Choose Option C if: someone who relies on your income is eligible to be named (the law, MGL Chapter 32 § 12(2)(c), allows only a spouse, a former spouse who has not remarried, a child, a father, a mother, or a sister or brother) and you want to provide them with lifetime continuing payments.

A simplified comparison

	Your monthly check	At your death
Option A	Largest	Stops
Option B	Reduced (annuity part only)	Refund of remaining accumulated deductions to beneficiary
Option C	Reduced (whole allowance)	Two-thirds continues to your one named beneficiary for life

How to decide

The board provides a benefit estimate showing all three options before you retire. The estimate shows the exact monthly amount for each. The board strongly recommends a counseling appointment to walk through the numbers, particularly if you're considering Option C — the right answer depends on your spouse's age, their independent income, and your own life expectancy.

You may also wish to consult a financial advisor or estate planner. The board cannot give individual financial advice. It can explain the formulas and run the numbers.

Common questions

Can I change my option after retirement? No. The choice becomes final on the effective date of your retirement (§ 12(1)).

What if I get divorced after retirement? Your Option C beneficiary designation is governed by your retirement application, not by your marriage. A divorce does not automatically remove an ex-spouse as your Option C beneficiary. See Domestic Relations Orders.