A misinterpretation of state pension law caused the Chicago Public School Teachers' Pension & Retirement Fund to overpay its retirees by nearly $2.8 million total between 2012 and 2014.
To “simplify and automate pension processing,” the pension fund in 2012 removed employees' resignation dates as a factor used to determine benefit effective dates, according to documents provided by the pension fund. Another factor — employees' final contribution date — was retained.
Under the new policy, the pension fund used the final contribution date to start benefits, instead of a later resignation date, despite a requirement under Illinois law that the later of the dates be used.
The error was discovered by the pension fund in 2014 and resignation dates were reinstated as a factor to calculate benefits. However, by that time, about 250 members had been overpaid roughly $2.8 million combined.
So far, the $9.3 billion pension fund has recovered roughly $787,000 from those retirees via one-time payments by retirees or monthly benefit reductions. The overpayments ranged from $566 to $217,185 per person. The Better Government Association first reported the overpayments earlier this month.
“The board of trustees acted to recoup the money because the assets of the CTPF are the combined assets of all the members ... and we will work to recover all monies as quickly as possible,” said Jay Rehak, board president, in a statement.
Mr. Rehak added: “The board of trustees recognizes that some of our members have been inconvenienced and rightfully frustrated in this process. We extend our apologies to them.”
As of June 30, 2015, the pension fund was about 54% funded.