1. You Cannot Split an Option 12(2)(d) Benefit
Judith A. Corrigan, General Counsel | PERAC
October 1, 2019
MACRS 2019 FALL CONFERENCE
Introduction of self, PERAC
Mention of the “Beneficiaries by the Numbers” presentation tomorrow morning with new PERAC associate general counsel Katie Brady.
I was hesitant to talk about a beneficiary-related topic prior to tomorrow, but you can just consider this a tease. You’ll want to come back for more tomorrow.
You can see I am not burying the lead here. You cannot split an Option 12 (2)(d) benefit. And I am going to talk about a case which says that, but first, let’s discuss… Who wants to split an Option 12(2)(d) benefit anyway?

2. Who Wants to Split an Option 12(2)(d) Benefit, Anyway?Me
People with more than one child (see bullet point one, above)
People with no spouse, no children, but more than one sibling
People with an ex-spouse and a child
Many permutations are dreamed of, but none are available
So the most common reason, I believe, although we have seen others, is that people have more than one child and would like to divide up the benefit among the tots.
A lot of people here know I am the single mother of almost 22 year old twins, and an 18 year old who just started college almost a month ago. I would love to name all three of them as my Option D beneficiary, and have the State Board of Retirement deposit into their little bank accounts one-third of the benefit available, but it can’t be done. So I have named my sister, as my option 12 (2)(d) beneficiary, should anything happen to me. I know she will look out for my kids.
I also believe in naming a 12(2)(d) beneficiary, which people sometimes seem to counsel only married people to do this, but it’s a benefit available to all as long as you have a relationship as described in the statute…
Who can be an Option D beneficiary?+++

3. An Eligible Option D Beneficiary is…
spouse,
former spouse who has not remarried,
child,
father,
mother,
sister or
brother of such member.
Here they are, as of course set out in G.L. c. 32, Section 12(2)(c)
I put in bullet point form because that missing comma after the word “spouse” drives me crazy. Here I have conquered that, rather than add in a comma which doesn’t exist in the original.
Lots of great choices, to name as a singular beneficiary of a life time allowance should you pass on while still a member before you have retired.
One question we have gotten in the recent past is whether a half-sibling is eligible. PERAC’s position is yes of course. If you have a birth certificate with one parent in common that will be fine.
With that by way of background, let’s talk about the Lukas case….

4. Cambridge Retirement Board (Lukas) v. PERAC, Docket No.: CR-13-466
Date of Decision: February 22, 2019 (DALA decision, but no appeal, so final decision of CRAB)
Decision Summary: PERAC's refusal to approve a Retirement Board decision to split an Option D benefit between two siblings is affirmed as the public employee retirement statute provides that only one Option D beneficiary may be nominated by a member. See M.G.L. c. 32, § 12(2)(d).
Here is the “Summary of Decision” taken straight from the DALA Magistrate’s decision.
All of these cases are sad, just by definition, and the Lukas case is no exception. Here you have a member of a retirement system dying at the age of On his death certificate, his marital status is that of widower. He is survived by two children.
The family….

5. The Family The member, a widower, deceased at age 52, survived by:
Daughter Brittany, age 21 (named guardian of her brother upon their father’s death)
Son Robert, age 17

6. The Beneficiary Form
Second page of form filled out by Mr. Lukas on November 12, 2006, the front page of the form was not produced.
In the “Name of Eligible Beneficiary” box, “Brittany Lukas” is listed, with her relationship in next box as “daughter.”
To the side of this “Robert Lukas” is handwritten, with his relationship noted to be “son.”
The document was not witnessed, and no party made this an issue, but we are all aware of cases which have come down to say that if the beneficiary form is not witnessed it is ineffective. The Magistrate did not find that here.
Here, Mr. Lukas listed two beneficiaries on the form he submitted. Although, it was not witnessed, PERAC concedes the validity of the document, as it has verified Mr. Lukas's signature and verified that Mr. Lukas filed the form with the Cambridge Retirement Board.

7. Relief Sought
Cambridge Retirement Board sought to split the benefit between the two children. PERAC rejected the calculation, saying only one beneficiary—and only the beneficiary listed in the beneficiary box on the form—was eligible.
Cambridge sought to base the benefit on Robert’s date of birth as opposed to Brittany’s.
Boston Retirement Board intervened to support this practice of splitting this benefit.

8. PERAC’s Stipulation
Given the dates of birth of each of the children, and presuming each child achieves his or her current life expectancy, the amount which would be paid out by the Cambridge Board to Brittany for her lifetime under Option D, or to Robert for his lifetime under Option D, would be so close the difference would be appropriately categorized as negligible.

9. DALA Decision
Option B allows the naming of multiple beneficiaries, while Options C and D do not.
Option C and D provide for an indeterminate amount of money for the life of the beneficiary.
If multiple beneficiaries were permitted, it would not be “at all obvious how to make the payment consistent with the present statutory language.”

10. DALA Decision (Continued)
Mr. Lukas wrote his daughter’s name in the beneficiary box on the form.
“This is as close as I can come to determining who Mr. Lukas would have chosen as his one Option D beneficiary if he had been aware he could choose only one of his children.”
Option D benefit awarded to Brittany.
Although Boston was permitted to intervene, DALA declined to rule on their practices.

11. Conclusion
Many legislative bills have been filed to address this situation, but none have passed.
Some seek to base the benefit upon the age of one beneficiary, and end the benefit upon his/her death.
Others seek to base the benefit upon the age of one beneficiary, but continue either all or some of the benefit until the death of the last remaining beneficiary.
PERAC and the Retirement Boards must follow the statute as currently written.