What are the different options for naming a beneficiary?

Active members of the Cambridge Retirement System have two options as to how beneficiaries will be paid out should the member die prior to retirement.  The first option is for the balance of the member’s Annuity Savings Fund to be paid out in a lump sum to any named beneficiary. 

The second option, called Option D, allows for continuing monthly payments to a beneficiary for the rest of that person’s life.  In almost all cases, the Option D benefit provides a significantly more valuable benefit to the beneficiary, and for that reason, we urge all members to consider naming an Option D beneficiary.

Only certain close relatives are eligible to be named as Option D beneficiary.  Eligible beneficiaries are limited to the member’s spouse, child, parent or sibling.  If the member is married, and living with his/her spouse, that spouse is presumed to be the member’s Option D beneficiary, and would be eligible for an Option D allowance should the member die before retirement.  In order to name a child, parent or sibling as beneficiary, the member must file a specific form with the Retirement Office.

By law, the member’s spouse is presumed to be the primary beneficiary even in cases where the member has named a different person on their Option D form.  For this reason, the Retirement System generally encourages people to name children as Option D beneficiaries, which would allow the child to receive benefits in the event that both parents died simultaneously. 

The amount of the Option D benefit is the same as what the member would have received had the member retired on the date of death, and elected Option C.  If the member is below the minimum retirement age, the benefit would be calculated assuming that the member had reached retirement age.

A chart summarizing the different beneficiary options is attached below.  The form to file a change of beneficiary is posted at http://www.cambridgeretirementma.gov/sites/cambridgeretirementma.gov/files/forms/beneficiary-change-form.pdf