Dozens of retirees in the city of Denver are legally required to return a total of $11 million in benefits the public plan administrator said it has mistakenly paid for years, a local investigation found.
About 40 retirees in the Denver Employees Retirement Plan (DERP) were notified last month that they will have to return overpayments distributed over the past 15 years, confirmed CIO Magazine. The story was first reported by CBS4 Denver.
But the clawback on payments, ranging from $3,000 to $3 million, could be a problem for pensioners living on a fixed income in the middle of a pandemic. All but one of the retirees were employed under Denver Health.
“We regret the impact this is having on these retirees, and we are meeting with them individually to discuss repayment options appropriate to their individual circumstances,” Heather Darlington, executive director at DERP, said Wednesday in an emailed statement.
“We are also committed to collaborating with Denver Health to explore possible solutions for mitigating the effects on these individuals,” Darlington added.
The city employee fund, worth roughly $2.3 billion, was about 62% funded in 2018, according to its most recent annual report. In 2018, the fund lost 2.4% for the year.
The overpayments are the result of an administrative error more than a decade ago in applying IRS codes to pension benefits, the report said.
DERP, which oversees 10,000 retirees and 9,500 employees, said it discovered the mistake last year during a compliance review. The pension plan said that the extra benefits went to “highly compensated” employees.
The Denver pension plan said that it has enlisted independent actuaries to review their processes and put in quality controls.
The findings from the investigation come weeks after it was also reported by CBS4 that executives in the Denver Health Medical Center, which is under DERP, received big bonuses in April, just as their hospital workers were asked to reduce hours or take leave without pay while combating the coronavirus.
Some critics online disparaged the oversight from DERP. “Geez. That’s a darn big mistake,” read one comment on Facebook reacting to the story.
Others wondered how the recipient of a $3 million benefit payment, the equivalent of an approximately $200,000 annual payment for 15 years, could have overlooked the extra income.
Related Stories:
University of Texas Endowment Oil Money In Jeopardy
New Jersey Likely to Cut Pension Contributions, S&P Global Says
Pennsylvania SERS Waives Minimum Required Payments from DC Plan
Tags: Colorado, Coronavirus, COVID-19, Denver, Denver Employees Retirement Plan, DERP, Funding, Pension