Weekend Economists Celebrates Psychedelia - March 14 - 15

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53. Pensions drastically reduce because of 'miscalculations'

AARP March 2015
Ed Cochran's weathered hands began to tremble as he read the letter from his union pension plan. "We made a terrible mistake," it began. The June 2013 letter said he was overpaid for nearly two decades, to the tune of $97,000, including interest. It demanded that he repay $66,000 within three weeks or face steep cuts to future payments until the overage was recouped.
"I thought I was going to have a heart attack, truly. My heart jumped right out of my chest," says Cochran, 65. His pension payout dropped from more than $1,300 a month to $800. "I thought, how could this be possible? It was 18 years that this went on," says the retiree, who installed ductwork in Chicago high-rises for a living. "After freezing and working in below-zero temperatures, it was just devastating."
In Cochran's case, Illinois' Sheet Metal Workers Union Local 73 pension fund erroneously overpaid him and 588 others by a whopping $5.2 million between 1974 and 2004. In 2013, nearly a decade after it discovered the errors during an audit, the plan sent letters to the retirees informing them of the miscalculation and seeking return of the overpayment — along with 7.25 percent interest.

Perry Kinard, 76, was sick with worry after he was notified of a pension overpayment. The retired New York City transit worker still bears the scars on his chest, and a bullet in his head, from thugs he encountered on the job. A man stabbed him in the lung in 1978 as he mopped the stairs at a subway station. In 1990, another man shot him in the head on a subway platform. He retired on disability at age 54.
Today Kinard is struggling to adjust to his $5-a-month pension — reduced from $1,414 after the New York City Employee Retirement System (NYCERS) said it had overpaid him $163,423 over 22 years. It said his disability pension should have been offset by his workers' compensation payments. It withheld all but $5 a month to recoup the excess payments.
"It's like I worked all my life for nothing," he says. "They took everything from me."

Millions Could See Cuts
Tucked into the massive budget bill passed by Congress in December was a provision permitting certain financially troubled multiemployer pension plans to cut existing benefits potentially to hundreds of thousands of retirees who are under age 80.

more...
http://www.aarp.org/work/retirement-planning/info-2015/take-your-pension-away.1.html