HOW LONG IS TOO LONG?

[jlf]

After receiving retirement benefits for 8 years the annuitant is advised that there was an error in the original calculation. In order to correct this overpayment the pensioner was advised that commencing on 10-31-00 there will be a reduction of $743.13 per month for 26 months. This represents a reduction of 22% of the full amount of $3362.64 per month. Restoration to $3362.64 will resume on 12-31-02.

Recognizing the length of time that has elapsed, can the Plan be enjoined from making the correction?

Best wishes,

Joel L. Frank

[Carol V. Calhoun]

This would depend on applicable state law. However, in my experience, this sort of idea is often applied in similar situations. To the extent that the plan provided benefits in excess of those it was legally permitted to provide, it may even be under a legal obligation to get the money back. At the same time, many plans are reluctant to require an immediate repayment of overpaid benefits, particularly when the overpayment was the result of an error on the plan's part, rather than the participant's. Thus, a plan will commonly compromise by obtaining repayment from the annuitant's future benefits, on a schedule which is intended not to pose an undue hardship on the annuitant.