According to The Oregonian, the trustees say they are concerned about how the mistake that went unnoticed for 13 years may impact the fund’s tax-qualified status about their fiduciary responsibility to follow the city charter that governs the fund. Some of the trustees want to move ahead and consider ways the fund can try to recover some of the overpayments, with one option being to reduce the future monthly pension payments of retirees over the course of their lifetime to make up for the overpaid benefits.
“This is a no-win situation,” citizen trustee Jeffrey Robertson said in the news report. “Either taxpayers overpay or we collect money from retirees.” Robertson favors recovering the money that should not have been paid out to retirees. “Again, we failed the taxpayer. We did not fail the members,” he added.
However, trustee Scott Westerman, a Portland police sergeant, is reluctant to go after the miscalculated pension benefits already paid out to retirees unless the fund is sure its tax-qualified status is in trouble. He pointed out the retirees received the overpayments “through no fault of their own” and trying to recover that lost money could hurt many on fixed incomes, according to the newspaper.
Since 1995, the fund miscalculated additional pension benefits the state Legislature required to compensate for the state’s taxation of public employee pensions. The error was discovered this summer by the fund’s new senior business operations manager.