By Karen Friedman
This weekend’s edition of the Wall Street Journal features a front page article by Theo Francis highlighting pension plans’ practice of trying to recover money they have mistakenly paid their retirees, often years later when the retiree cannot afford to pay back the money.
Although this practice, often called “recoupment,” has gone on for years, the article zeroes in on a recent variation affecting AT&T retirees around the country: Using a debt collection agency to seek recovery of pension overpayments. The article focuses on several AT&T retirees.
Sydney Smith, a former AT&T information-technology analyst, was repeatedly harassed by a debt collection agency demanding repayment of $19,306.95, the amount AT&T had overpaid her because of an error on the plan’s website. Smith, a single mother, could not afford to pay back that kind of money.
Smith enlisted the help of Roger Curme, the director of the South Central Pension Rights Project, one of six federally-funded pension counseling projects. Roger told the Journal that the tactics AT&T employed were unprecedented and harsh.
Over the 25 years of the counseling program’s existence, project attorneys have heard from many retirees who had no way of knowing that they had been overpaid as the result of plan mistakes. But the AT&T retirees were the first they had heard from who had been contacted by a collection agency.
The article also addressed the larger recoupment issue by focusing on Fiat Chrysler which is trying to recoup money from about 300 of the company’s retirees. Jay Kuhnie, president of the National Chrysler Retirement Organization, stressed in the article that retirees might have made different life decisions had they known that they were overpaid. As Jay noted “The retiree has no way of going back.”
The Pension Rights Center and the pension counseling projects are helping people challenge unfair recoupment actions by their plans. If you are retired and your former employer is attempting to recoup overpaid benefits from you, contact us at (202) 296-3776 for a referral to a pension counseling project that may be able to assist you.
We are also working with plans and employers who agree with us that these practices are wrong to develop common ground proposals that fairly balance the interests of companies with the interests of their former employees. We invite AT&T and Fiat Chrysler to join us.
We encourage you to read the entire Wall Street Journal article, here. If you are unable to access it, here’s a great summary from Fortune Magazine.