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Refund


joel
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After being retired for 10 years and receiving a pension from a public employee retirement system the pensioner is informed that he owes $25,000 to the PERS. Accordingly, the PERS is reducing his pension over the next 96 months in order to collect the overpayment. Is there no statute of limitations?

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Better yet, is there a reason? Seems appropriate to consider any statute of limitations in the context of "why".

Also, does the plan permit this action?

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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A cursory reading of my post reveals that the reason for the request for a refund is the overpayment of the pension over the 10 years of retirement. Assuming this overpayment is not in dispute, is there a federal statute of limitations? Or does the PD govern? Is the plan entitled to a refund after 20 years, 30 years or is it simply open ended. Can the plan collect the refund from the pensioner's estate if the overpayment is determined after the pensioner dies?

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This matter is governed under state law, not ERISA. You need to look at the application of an estoppel defense by the employee- e.g., the employee retired 10 years ago in reliance on the amount of the pension that he was promised by PERS. Therefore PERS cannot reduce his pension because of its own mistake. However, there may be a state law requiring that overpayments be collected from the employee.( Erisa permits a reduction in pension benefits to recover overpayments.) The employee could claim that the state S/l limited recoupment to the last 6 or so years of excess benefits not all excess payments. The reduction in payments may also be limited by state garnishment laws.

As far as the estate claim, a claim for excess benefits by PERS would have to valid under state contract law which would survive the death of the employee. If the excess payment claim is equitable in nature it may be extinguished when the employee dies because it could only be recouped against the pension payments.

I think the retiree needs a lawyer.

mjb

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