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Pensions Ask Retirees to Pay Back Tens of Thousands

usa money back check shrinks overpayment with interest counseling project

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#1 Hum

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Posted 25 October 2013 - 11:46

Some pension plans have overpaid retirees for years -- now they're demanding their money back.

For retirees, it can mean owing tens of thousands of dollars. And with little warning, their pension checks are being slashed to cover their debt.

In April 2011, New Jersey resident Carol Montague received a letter from American Water Works Co.'s pension plan informing her that it had overpaid her for more than five years and it wanted its money back -- plus interest. Montague, now 67, was told she owed roughly $45,000.

Two weeks after receiving the letter, Montague's pension benefits dropped from $1,246 to around $325 a month, around half the amount she should have been paid all along. The plan takes out roughly $300 a month in order to pay itself back.

Once Montague's healthcare premium is deducted, her monthly pension check shrinks to less than $25. She gets another $1,200 a month from Social Security, but it's not enough. So, in addition to her part-time job as a school crossing guard, she is working as a salesperson at Macy's.

So far, Montague has repaid almost $9,000 -- calculations show that she won't repay her debt in full until 2024.

American Water said Montague signed a document verifying the correct pension amount and that they are legally allowed to collect any overpayment, with interest, in order to protect the viability of the pension fund. Montague acknowledges she made a mistake, but didn't think she needed to confirm that her benefits matched the amount in the letter she had signed almost a year before she retired.

"I put it away in a steel box. I never looked at it again. It was stupid on my part," she said. "But it took (almost) six years for them to find out they overpaid me?"

With the help of the Mid-Atlantic Pension Counseling Project, a government-sponsored program, she has appealed to the pension plan to waive the interest, as well as ease some of the overpayment burden. But the plan has refused.

As pensions face increased financial scrutiny -- and shrinking funds -- pension counseling programs are seeing even more cases like Montague's.

Karen Ferguson, director of the Pension Rights Center, a Washington D.C.-based advocacy group, said that, in most cases, retirees have no idea they are being overpaid since "the way a benefit is figured in a typical pension plan is impossible for an ordinary person to fathom."

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#2 Growled

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Posted 25 October 2013 - 12:50

 

Some pension plans have overpaid retirees for years -- now they're demanding their money back.

 

I am double minded about this. I know it's not right to keep money that isn't your's. I also know that if someone overpaid me it would be their tough luck.



#3 OP Hum

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Posted 25 October 2013 - 23:39

What a nightmare for seniors.



#4 DocM

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Posted 26 October 2013 - 00:22

The US Social Security and Railroad Retirement systems do the same thing. If they over-pay you then catch it you have to pay it back.

SSDD.

#5 Nashy

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Posted 26 October 2013 - 00:27

Shouldn't have to pay back that amount of money.  ######, you're not allowed to put someone into hardship for a company ###### up like that.  Charging interest for their ######up?  That's a bit rich.  There are some terrible people running corporations on this planet, they need a bullet.  You ######ed up, wear it.



#6 Buttus

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Posted 26 October 2013 - 00:31

Wow, i'm undecided...   i guess no "bank error in your favor", but maybe they should take some of the blame and only make her pay back what extra they gave her over half of the time or something?

 

damn, that sucks



#7 blade1269

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Posted 26 October 2013 - 08:17

I am double minded about this. I know it's not right to keep money that isn't your's. I also know that if someone overpaid me it would be their tough luck.


Would they care if we overpaid them? Not at all...

#8 seta-san

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Posted 26 October 2013 - 08:24

what you're all missing is that these over payments mean that others in the pension system won't have enough money in the accounts to pay for them. getting the money back isn't for the company, it's for the people who are going to be retiring in the coming years.



#9 metallithrax

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Posted 26 October 2013 - 08:44

Claim the money back - yes.  But not at a rate that puts someone into hardship.  And no interest charges either, your mistake, suck it up.



#10 Star-Pirate

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Posted 26 October 2013 - 09:49

Welcome to a world run and owned by large money grabbing corporations... You just have to look at the energy firms in the UK at the moment squeezing people, who can't afford to pay there bills at the moment.



#11 seta-san

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Posted 26 October 2013 - 10:24

Welcome to a world run and owned by large money grabbing corporations... You just have to look at the energy firms in the UK at the moment squeezing people, who can't afford to pay there bills at the moment.

 

your energy isn't made by magic. There are miners who have to get the coal/oil/uranium to run the thing. in the case of a nuclear plant it has to be purified to a certain level through a huge energy/time intensive process with many people involved. then the plants are manned by scientists, engineers, (union) tradesmen, IT, human resources, management, customer service. It's amazing how cheap they make energy to begin with. but you're going to focus on the absurd pay of the one guy on the top and not focus of the hundreds to thousands of people along the way that turned make this all possible.



#12 Brian M.

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Posted 26 October 2013 - 11:06

your energy isn't made by magic. There are miners who have to get the coal/oil/uranium to run the thing. in the case of a nuclear plant it has to be purified to a certain level through a huge energy/time intensive process with many people involved. then the plants are manned by scientists, engineers, (union) tradesmen, IT, human resources, management, customer service. It's amazing how cheap they make energy to begin with. but you're going to focus on the absurd pay of the one guy on the top and not focus of the hundreds to thousands of people along the way that turned make this all possible.

 

The energy industry in the UK needs reworking. 

 

All of the energy companies in the UK announced massive, better than ever profits. Soon after, they raise energy prices by 10% here in the UK. Well over 3 times the rate of inflation. And of course, *every* company rises prices at exactly the same time. If they were supermarkets, they'd be done for price fixing, yet the energy companies get away with it.

 

My energy bill is roughly £1800 a year. That's an extra £180 a year I need to find. Whilst that might not be a problem for me, some pensioners don't have that kind of money floating around. Especially when Centrica, the company that owns British Gas, announced profits of £1.45bn in the 6 months prior to June this year. Is that *really* not enough?



#13 Star-Pirate

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Posted 26 October 2013 - 11:10

The energy industry in the UK needs reworking. 

 

All of the energy companies in the UK announced massive, better than ever profits. Soon after, they raise energy prices by 10% here in the UK. Well over 3 times the rate of inflation. And of course, *every* company rises prices at exactly the same time. If they were supermarkets, they'd be done for price fixing, yet the energy companies get away with it.

 

My energy bill is roughly £1800 a year. That's an extra £180 a year I need to find. Whilst that might not be a problem for me, some pensioners don't have that kind of money floating around. Especially when Centrica, the company that owns British Gas, announced profits of £1.45bn in the 6 months prior to June this year. Is that *really* not enough?

That's exactly the truth... they are also holding the country to ransom because they know that in some way we need to use there services.



#14 DocM

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Posted 26 October 2013 - 13:43

Welcome to a world run and owned by large money grabbing corporations...
>


Except for the fact that govt benefits like social security, railroad retirement, etc. etc. work the same way and have since day one.

#15 spenser.d

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Posted 26 October 2013 - 13:50

I'd say its unfair, but she signed a contract that explicitly stating what she should be getting.  She should've come forward right away with the mistake.

 

It's not all her fault though as she didn't make the mistake of paying too much - they shouldn't be ruining her life just to get the money back.