Macon officials told retired city workers they will continue to investigate a bank error that is requiring retirees to return a portion of their pension benefit after being mistakenly overpaid for more than a year.
More than 80 people showed up for Wednesday’s meeting of the General Employees Pension Fund Board, which was called to educate employees and retirees about their pension plan and to answer questions about the overpayment.
City officials say that last year, State Street Retiree Services, which the bank hired to manage payments from the pension fund, mistakenly doubled retirees’ cost of living increase. Retirees’ benefits normally go up by 1.5 percent every year. But late in 2008, Human Resources Director Ben Hubbard discovered that State Street had been incorrectly paying retired city workers a 3 percent cost-of-living increase for months, officials said. Ultimately, the mistake resulted in at least 15 months worth of overpayments — for most of 2008, plus the beginning of 2009.
Letters were sent to those who were impacted asking that they pay the money back over the same time period. As of May 1, retirees’ benefit checks would show a 1.5 percent reduction in pay, in addition to the 1.5 percent cost-of-living increase they receive in 2009, the letter states.
Hubbard said between 200 and 300 people were impacted, and the average amount they were overpaid was $15 per month.
Pension Board Chairman Reggie Moore said there are still questions that State Street needs to answer, including the total dollar amount that was overpaid. City officials will speak to bank leaders today.
The board will hold a special called meeting next week to decide what other options might be available for collecting the funds. Ultimately, officials said, the money that was mistakenly paid out must be returned to the pension fund. The pension board could ask City Council to rewrite pension fund rules and forgive retirees from paying back the benefit.
But Councilman Mike Cranford, chairman of the Appropriations Committee, told the group he thought it was unlikely that the overpayment would be forgiven. That would create a legal precedent requiring the same action should a similar mistake occur in the future, he said.
“It will harm the fund in the long run for everybody else,” he said. More likely, he said, the council will look at extending the repayment period beyond 15 months to further lessen the individual financial burden.
Macon’s pension fund has taken its share of knocks from the economy. At its peak in 2007, the fund held some $74 million in assets. A gyrating marketplace pushed the value down to $50.7 million last November. Moore said the value is now about $53 million.
The fund’s actuary, Charles T. Carr, told the group that the pension plan has been overfunded for years, and that because of that it has weathered the recession better than other pension plans. But in the future, the shifting economy may require the city to put more money into the fund, he said.
For the most part, the retirees and employees at the meeting were most interested in gaining more information about the overpayment incident and were not overly upset. “They’re going to do what they’re going to do,” said Ken Mason, a retired city mechanic. “I just wanted to see what their answer was for it.”
Sue Patat receives a benefit in the name of her deceased husband, who had worked nearly 40 years in the Parks and Recreation department. She said she wasn’t inconvenienced by the overpayment or the requirement that it be given back.
“It was such a small amount, I just didn’t know what the fuss was all about,” she said.
But at least one retiree in attendance — Joan Fox, who worked a civilian job in the police department — said neither the city nor retirees should have to pay back the money. Instead, the bank should, she said.
“State Street should eat it,” she said. “The people who made this mistake should be held responsible.”
To contact writer Matt Barnwell, call 744-4251.