New Law Allows Fix for Pension Benefit Calculation Errors

The Governor signed a bill that allows erroneously calculated pension benefits to be corrected if the mistake was the consequence of a clerical or administrative error. Prior to the change in law, a mistake could only be corrected if discovered during a 35 day administrative review period beginning at the time the benefit was awarded. Under the new law, corrections can be made to the benefit of the pension fund or the retiree:

“This seems like a common sense way to make it legal to fix obvious errors,” Luppino-Esposito said. “There doesn’t seem to be a lot to it except just allowing wrongs to be righted and there’s not much to criticize there.” 

The new law changes the language of existing legislation to enable a process where the situation can be set right if errors were found and correct monies determined. If a pension beneficiary is found to have been shorted, he or she may receive a lump sum making up the difference. Alternately, if it’s determined that too much money was paid out, the beneficiary would be asked to return a lump sum to the state.

There is a "safe harbor" provision that exempts pensioners from having to refund overpayments if the overpayment was the result of a clerical or administrative error that went undiscovered for three years or longer. In those situations, the benefit would only be adjusted downward going forward.

The article only mentions the applicability of the new law to the state funds. The law also applies to downstate and suburban municipal police and fire funds. My organization supported the bill for this reason. It's certainly not an earth-shattering change to Illinois pension law, but it's certainly a sensible addition to the Illinois Pension Code that should have been introduced years ago. 

Context is important, though. Just a few short years ago, the only pension changes passed by the General Assembly typically involved benefit sweeteners. It can't be overstated how dramatically pension politics has changed in Illinois. Hopefully the change didn't come too late for Illinois taxpayers.