(dissenting). We respectfully dissent. It is well recognized that the Comptroller has exclusive authority to act upon all applications for any form of retirement (Retirement and Social Security Law, § 74, subd b), including the determination of the mental capacity of members to make applications and elections (Matter of Morris v New York State Employees’Retirement System, 6. AD2d 937). The hearing, officer emphasized that petitioner, by her failure to elect an option on decedent’s behalf (Retirement and Social Security Law, § 90, subd a), waived such right. This waiver, coupled with petitioner’s failure to comply with the statutory filing deadline, was deemed to preclude annulment of the option established for decedent, regardless of the competency question. Since the Comptroller notified decedent on July 19, 1977 that his disability retirement had been approved, decedent was required to elect an option within 30 days (Retirement and Social Security Law, § 90, subd b). Moreover, the time for filing an option election, or withdrawal thereof, could not be extended more than 60 days after decedent’s effective date of retirement (Retirement and Social Security Law, § 90, subd bb, par 1). Petitioner’s application was filed more than eight months after the effective date of retirement, and thus the refusal to permit withdrawal may not be characterized as arbitrary and capricious (Matter of Pentinen v New York State Employees’ Retirement System, 60 AD2d 366, mot for lv to app den 44 NY2d 647). However, our inquiry does not end with this determination. An option may still be voided where the retiree is afflicted by a mental illness in the nature of a psychosis which affects his rational ability to make an election of benefits (Ortelere v Teachers’ Retirement Bd. of City of N. Y., 25 NY2d 196). Avoidance is premised on the rule stated in section 18C of the Restatement 2d, Contracts, and reiterated by this court in Keith v New York State Teachers’ Retirement System (46 AD2d 938), to wit, that although the retiree “had not established any notice on the part of the retirement system as to the particular incompetency, the election was voidable if there was proof that the retirement system would not be prejudiced or that avoidance would not be inequitable” (Matter of Pentinen v New York State Employees’ Retirement System, 60 -AD2d 366, 368, supra). It is apparent that the hearing officer never reached the issue of incompetency, together with the balancing of the equities relative to avoidance. These failures constitute error as a matter of law. A review of the record establishes that the retiree was suffering from a mental illness in the nature of a psychosis that affected his decision-making capacity. Petitioner’s expert, Dr. McGarry, testified that he doubted that decedent could make the decision as to which option to choose. Significantly, the system was notified of this condition well in advance of the retirement date by Dr. Post, who examined the retiree at the system’s request. On March 21, 1977, he diagnosed the retiree as a “schizoid character with periodic decompensation and psychotic episodes”, suffering from “organic mental syndrome with impaired mental functioning defects of memory, recall and recollection, poor orientation to time and place and intellectual deterioration”. Dr. Post concluded that the retiree was unable to *678perform his duties as a security officer and that “he was non compos mentis * * * [h]e was not very competent.” Finally, the record reveals no significant changes of position by the system beyond those that flow from the barest actuarial consequences of benefit selection. Nonetheless, respondent contends that petitioner should not be allowed to benefit from her own inaction. In McCarthy v Levitt (59 AD2d 952, mot for lv to app den 43 NY2d 647), this court noted that the Ortelere case applied only to the affirmative acts of an incompetent, finding “it would be a dangerous precedent to grant benefits to an incompetent who failed to act, and to allow a beneficiary who also failed to take action to thereb gain by that inaction” (McCarthy v Levitt, 59 AD2d 952, 953, supra). McCarthy, however, is distinguishable from the instant matter in that the employee there died without ever having retired. Moreover, Ortelere focuses upon whether the retiree’s incompetence works to effect an improper result. The equities involved should not hinge on whether or not the retiree actually selected an option, when, as here, the mental incompetence clearly affected his ability to do so. While a strict interpretation of the time limitations of section 90 is encouraged by respondent, we must recognize the “special relationship” between the retirement system and its members (Keith v New York State Teachers’ Retirement System, 46 AD2d 938, 941, supra). Essentially, “the nature of the system * * * is the protection of its members and those in whom its member have an interest” (Ortelere v Teachers’ Retirement Bd. of City of N. Y., 25 NY2d 196, 205, supra). On balance, the factual situation herein is legally sufficient to invoke the doctrines set forth in Ortelere v Teachers’ Retirement Bd. of City of N. Y. (supra) and Keith v New York State Teachers’ Retirement System (supra). The equity of this result is readily apparent in view of the stark contrast in monetary benefits available under the respective options. * Moreover, the facts do not warrant an estoppel against petitioner, despite her failure to elect a timely option (see Schwartzberg v Teachers’ Retirement Bd. of City of N. Y., 273 App Div 240, affd 298 NY 741). Accordingly, the relief demanded in the petition, insofar as it seeks annulment of the option one-half retirement option established under section 90 (subd bb, par 2) of the Retirement and Social Security Law should be granted. However, since decedent neglected to name a beneficiary, the matter should be remitted to the Comptroller for a determination of the option and beneficiary which “ ‘would, in all probability, have been the choice of the incompetent if he had been of sound mind’” (Schwartzberg v Teachers’ Retirement Bd. of City of N. Y., 273 App Div 240, 244, supra).
Under option one-half, decedent received $287.33 per month during his retirement, while his estate received the value of his contributions to the system ($236), the monthly annuity payment owing to decedent ($242.13), and a death benefit of $3,000. Under Option One, decedent’s monthly payment would have been a lesser amount of $246, but his estate would have received the present actuarial value of his monthly retirement which amounted to approximately $40,000.