Embezzler Pensions Could be Tapped by Buyer Bill

November 17, 2003 (PLANSPONSOR.com) - The pensions of those who embezzle state and local government funds could be subject to court-ordered restitution under a current House bill.

>H.R. 2222, the  Public Employer’s Restitution Act of 2003 , was introduced in  May by Representative Steven Buyer (R-Indiana).  The bill would carve out another exception to the anti-assignment rule under the Employee Retirement Income Security Act (ERISA) by authorizing state and local governments to obtain “qualified embezzlement restitution orders” against employees convicted of embezzling funds, according to Thompson Publishing.

>The bill, which was patterned after ERISA’s provisions for qualified domestic relations orders (QDROs), was drafted in response to a situation that arose in the Town of , Indiana. The town’s former treasurer embezzled more than $70,000. After he was found guilty, the town obtained a civil judgment for restitution of $51,000, but the former treasurer paid only $510 in restitution.

>In introducing the bill, Representative Buyer said, “The former employee has a private pension as his only source of income. He has no incentive to find work, as any wages would be garnished. Under ERISA, civil judgment for restitution cannot be attached to the pension. So, Clermont loses out on fifty thousand dollars and the guilty avoids complying with the judgment.”

>Currently, only QDROs and qualified medical child support orders (QMEDs) are assignable to alternate recipients under ERISA.

>H.R. 2222 is currently before the Committee on Education and the Workforce and the Committee on Ways and Means.