Senate bill would give Illinois pension funds chance to recover funds paid in error

SPRINGFIELD – The Illinois Senate voted unanimously Tuesday to approve a bill that would allow three State employee retirement systems to recover funds mistakenly distributed to annuitants either directly or by deducting excess amounts from the remaining benefits payable to the recipient.

Senate Bill 3309 would amend the Illinois Pension Code articles governing the State Employees Retirement System, the Judges Retirement System and the General Assembly Retirement System to allow those funds to recover any mistakenly distributed payments, provided they fix the error within three years. The Senate voted 56-0 in favor of the bill, which now goes to the House for consideration.

Several other state pension funds, including the State Universities Retirement System and the Teachers Retirement System, already have statutory authority to recover funds mistakenly distributed due to errors in calculation.

“We all know that mistakes can happen,” said Sen. Jennifer Bertino-Tarrant, the bill’s sponsor. “The systems should be able to fix an error.”

The impetus behind SB 3309 can be traced to a January 13, 2014, ruling by the Illinois Appellate Court that denied the State Employees Retirement System (SERS) the right to recoup benefits mistakenly granted to a retired state employee.

In Sharp v. SERS, 2104 IL App (4th) 130125, the appeals court affirmed a lower court decision that SERS lacked the statutory authority to recover excess benefits mistakenly awarded to a former Secretary of State investigator where the pension fund board itself had approved the amount and did not learn of its mistake until nearly a year later. In such cases, the Court said, SERS was limited to a 35-day period provided by the Administrative Review Law.

“The Board should have noticed any error in the rate used to compute [Sharp’s] pension at that time, but it did not,” the Court wrote in its opinion. “Absent statutory authority, the Board may not correct the error now. Perhaps the Board should have the authority to do so. This is a matter for the legislature. It is not appropriate for the court to imply such authority.”

A copy of the Appellate Court opinion in Sharp v. SERS, can be found by clicking the link at right. Sharp_v_SERS,_2014_IL_App_4th_130125.pdf (58 KB)