Pension Fund settles lawsuit on 'overpayment'
The Chicago Teachers Pension Fund (CTPF) notified teachers who had retired between June 2000 and August 2004, who were paid on a regular school calendar, that they may have been overpaid because their pensions were calculated differently than the Chicago Board of Education felt they should be. During that time period, teachers who retired and had worked five days in a ten day period were given credit on their pension calculations for ten days, not five. This resulted in a slightly larger pension for each individual.
Pension fund trustees at the October 2012 meeting. Substance photo by George Schmidt.The Board of Education (BOE) sued in 2004, asking that pensions be recalculated and overpayments be returned. Litigation has continued for seven years. CTPF, joined by Retired Teachers Association of Chicago (RTAC), defended the calculations, but the BOE appealed and litigation continued. In order to seek a settlement that would not unduly burden retirees, the CTPF accepted a proposal that would avoid continued expensive litigation and the possibility of requiring pensioneers to return overpayments.
Under the settlement agreed to by CTPF and BOE, pensions will be recalculated. If an individual was overpaid, the 3% Automatic Annual Increase (AAI) on the corrected pension will be lowered, to as much as 0%, for 2013 and 2014, starting in January of 2013, until the corrected pension matches or exceeds the current pension. By January of 2015, the regular 3% AAI will resume for all involved individuals. In addition, the BOE wll dismiss its case and not seek overpayments from anyone who retired in 2000 to 2012.
CTPF sent a letter to each involved individual naming the overpaid amount and held two explanatory meetings at two locations. A power point presentation, on November 28 at the Thompson Center Auditorium, and on December 3 at the Oak Lawn Hilton, explained the settlement and how it would affect individuals. A webinar was also held on November 26. CTPF will send an additional letter to each affected person spelling out the corrected pension. Retirees who wish to meet with a counselor may make an appointment to do so after January 1, 2013
The above information from the CTPF was in a letter, dated November 16, 2012, sent to each individual who retired between June 2000 and August 2004. Because the letter may have arrived shortly before the envelope containing the December pension direct deposit, some individuals may not have noticed the overpayment letter when it arrived.
Starting in August 2004, pensions were calculated on the basis of a day of pension credit earned for a day worked.
The estate of any individual who passed away since receiving a pension with an overpayment will not be affected.
Those who retired between June of 2000 and August of 2004, who worked more years and/or obtained more degrees, face a larger estimated overpayment. All things being equal, those who retired in August of 2004 owe more than those who retired in June of 2000. (This reporter retired in 2001).
