2 Investigators: Pensioners Fight Back When Fund Demands Overpayments Be Returned

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(CBS) — You retire assuming the pension you were told you’ll get is correct. But imagine being told you were overpaid by your pension fund and now you have to pay back tens of thousands of dollars.

That’s what happened to more than 500 retirees who were overpaid more than $5 million over 40 years because of mistakes admitted by the Sheet Metal Workers Local 73 pension fund.

Pension rights officials say the tactics used by a union to get back the money are among the worst they have ever seen. CBS 2 first reported on this story last year; now, the retirees are fighting back with a lawsuit that could help protect all retirees.

They worked for decades as sheet metal workers. It was 37 years for 82-year-old Carl Meeks. He retired 20 years ago and with his wife, Ellen, was living on a $1,500 monthly pension.

Then, in 2013, the pension fund sent a letter to Meeks saying he was overpaid more than $44,000. With $33,000 interest, he had to pay back $77,281.

The letter shocked the couple “because it was their mistake,” Ellen Meeks says.

“We almost had a heart attack, both of us,” Carl Meeks says.

Worse yet, the pension fund demanded that Meeks pay a lump sum of more than $55,000 up front because their calculations concluded Meeks would not live  long enough to pay the money back through monthly reductions in his pension.

“I was amazed,” says their attorney, Tim Kelly, who filed the lawsuit in behalf of Meeks and seven other retirees. “I was outraged that they could even do this, that a union would actually consider going after its own pensioners for 20 to 30 years of mistaken payments.”

Kelly accuses the pension fund trustees of negligence and violating their fiduciary responsibility to hire competent personnel to calculate pensions and perform independent audits. The suit also charges that the fund incorrectly informed retirees that a federal law enforced by the IRS required the fund to collect the overpayments from them.

The IRS recently clarified to the union pension fund that they were wrong. They did not have to get back overpayments made as a result of their mistakes from the retirees.

“It’s a game-changer,” says Karen Friedman, a spokeswoman for the Pension Rights Center. “The story CBS 2 did was so important to bringing this issue to the attention of the IRS and changing policy.”

Says Kelly, the attorney: “They can collect it from the trustees, they can collect it from the insurance the union maintains.”

Now pension experts say the lawsuit against the sheet metal workers pension fund could result in a court order supporting other needed reforms, such as a three-year limit on how far back a pension fund can go to collect overpayments.

“In no circumstance should pension plans be able to charge interest,” Friedman says. “That’s just outrageous.”

“We would like to see the court draw a line in the sand,” Kelly adds, “that says you can go so far and no further.”

The retirees have also had monthly pensions reduced to help pay back the overpayments and interest. And they say fund officials have not acknowledged the IRS clarification about other ways to get back the money.

Rocco Terranova, the union president who also services on the pension fund board  of trustees, says they could not comment because of the pending litigation.

The spokeswoman for the Pension Rights Center has this advice for anyone with pension problems: “Before you retire, look at your benefit statement and if the benefit looks wrong, you can bring it to the plan administrator, or seek help from the Illinois Pension Assistance Project.”

They can be reached at (888) 425-6067.

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