Improved retirement options made retroactive
HB 4424, now Chapter 143 of the Acts of 2005, updates mortality tables for those selecting an Option C retirement plan enabling a retiree to leave two-thirds of one's retirement allowance to a surviving eligible beneficiary. Under previous law those selecting Option C would have had their pension reduced by as much as 25 percent to provide for a surviving beneficiary. In recent years about 90 percent of retirees did not choose Option C because the reduction was too high. However, the new mortality tables lessen that reduction by as much as 50 percent.
The new law allows those who chose Option A or Option B (or the surviving spouse of such a person) and who retired between 7/1/04 and 12/27/04 to take advantage of the higher benefit should they now choose to elect Option C. Moreover, those who retired between 7/1/04 and 12/27/04 and who chose Option C benefit, as well, from the adoption of the new mortality tables.
The Massachusetts Teachers' Retirement Board is treating teachers whose retirement was effective 6/30/04 as covered by these changes. They are also likely to allow teachers whose retirement was effective 6/30/04 to switch from Options A or B to Option C. Under previous legislation, employees who retired after 12/27/04 were granted these benefits.
In addition, the new law specifies that retirement boards must notify those now eligible of their right to select a different retirement option. The MTRB is expected to notify those eligible soon. Eligible retirees have until July 1, 2006, to change their option selection, if desired. After that, the MTRB and other retirement boards have 180 days to process any changes. All benefit adjustments will be made retroactive to the member's date of retirement.
The MTRB has posted information relative to these changes on it Web site, www.mass.gov/mtrb. (Click on Legislative News.) Eligible retired teachers are encouraged to consult the MTRB Web site frequently for updates on procedures that need to be followed.