Teachers’ Pension Fund Makes Multi-Million Dollar Mistake
The Chicago Teachers’ Pension Fund miscalculated retirement benefits and overpaid retirees by $2.78 million. Now pensioners are asked to pay the money back.
For two years, the Chicago Teachers’ Pension Fund used incorrect dates to calculate retirement benefits — a mistake that resulted in $2.78 million in overpayments for more than 200 retirees.
|“When you’re trying to make ends meet, this is very difficult.”|
|Former third-grade teacher Sandra Inniss, above|
Now the fund is asking retirees for its money back.
“They made a mistake — a big mistake," said 68-year-old Jean Bosak, who's struggling to pay back almost $89,000.
"I'm handicapped. I'm old. I live alone," she said. "Of course it's hard on me."
The fund made what it called an administrative change in 2012 “in an effort to simplify and automate pension processing,” according to CTPF documents. The new policy used a uniform measure to determine when pensioners began receiving payments, records show. The fund changed its methods in 2014 after a staffer discovered the policy resulted in overpayments, according to pension fund officials.
In a statement, Jay Rehak, president of the 12-member board that oversees the pension fund, blamed “an error in interpretation and application of the Illinois Pension Code."
As a result of the error, the fund miscalculated benefits for 234 retirees who were wrongly given lump-sum payments, ranging from $566 to $217,185 a person, as back-pay from 2012 to 2014, records obtained under the Illinois Freedom of Information Act show.
Retirees were told last year they had to return the money, either by paying the amount back in full or in monthly increments through a reduced pension.
Former third-grade teacher Sandra Inniss said she felt “sick” when she found out she had to pay back about $72,000.
“I just could not understand,” she said. “I had been calling. I had been asking [the pension fund] for a whole year, ‘what is this money for?’”
Inniss said she was repeatedly told that the amount was correct and that it was a benefit she earned, so she ultimately spent the money. Now she has to take a reduced pension to pay back the fund.
“Before they started taking the money out of my check, I was still struggling,” Inniss said. “When you’re trying to make ends meet, this is very difficult.”
Clarice Berry, former president of the Chicago Principals and Administrators Association, said she, too, had been hit with about $15,000 owed to the fund.
“I was angry because I had done everything correctly,” Berry said.
Even still, she considers herself one of the lucky ones because some people owe much more.
“I couldn’t imagine someone calling me to say I owed $100,000 back in arrears because of their error,” Berry said.
The pension fund’s executive director Chuck Burbridge said he recognizes the impact on retirees but said the collection efforts are necessary.
“There is no pleasure taking and doing this. This is a tough, tough error to admit, recognize and correct,” said Burbridge, who was not at the fund when the overpayments were made. “We are taking every step necessary to make sure we administer the fund according to statute appropriately because it’s a bad situation to be in.”
Rehak said trustees “acted prudently” by setting a policy to recoup the money. So far, the fund has recovered $762,558.58, records show.
“As fiduciaries of the fund, the board cannot ignore its larger responsibilities and we will work to recover all monies as quickly as possible,” Rehak said via email. “We also understand we have a fiduciary responsibility not only to our contributors and our annuitants, but also to the taxpayers of Chicago and Illinois who have the right to expect financial accountability.”
CTPF, which is funded mostly by taxpayers but also through employee contributions and investment income, provides retirement benefits to roughly 28,000 former Chicago teachers and administrators.
With $10.7 billion worth of assets, CTPF is only 52 percent funded, according to its 2015 annual report. A minimum funding of 80 percent is generally considered healthy.
Mayor Rahm Emanuel recently committed to a $250 million property tax hike to shore up money specifically for the teachers’ pension fund.