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In the spring of 2008 FPDR discovered that they had been overpaying benefits to retirees as part of their implementation of the tax remedies which had been passed by the legislature during the 1990s. We reviewed general information provided by FPDR staff at that time regarding the overpayment and were satisfied that overpayments had been made, though we have never analyzed the figures for any specific FPDR member. Shortly after this miscalculation was discovered, the FPDR Board stopped these overpayments and continued making payments at what they believed to be the correct, lower amount.
Recently those FPDR retirees who are affected by this issue have received a letter from FPDR staff member Nancy Hartline outlining the amount of overpayments which have been made to them and telling them that commencing with the August 1, 2011 pension payment, these members would not receive the 2% COLA increase as that amount would be withheld and applied against the overpayment amount.
We believe that withholding these amounts without the permission of the FPDR retiree is contrary to Oregon’s wage claim statutes, which do not permit employers to use self-help in recovering amounts which they claim to be owing. Our firm is in the process of preparing to file a class action wage claim in Multnomah County Circuit Court for all FPDR retirees who are adversely impacted by this Board action.
We are planning to file this action prior to the initial withholding of payments on August 1, 2011 and will ask the judge to stop this improper withholding, restore payments to their full amounts, and to return all payments improperly withheld to retirees. We will post a copy of that complaint on our website when it is filed and generally update this section of our website to let FPDR members know of the progress of the lawsuit.
The FPDR Board has characterized the withholding of COLA increases as necessary to protect the tax status of the FPDR plan. While it is true that the FPDR plan may have to take some remedial action because of its overpayment of benefits, it is not true that the IRS compels the Board to withhold these COLA increases. In fact, the FPDR Board is simply taking the easiest way of resolving the problem and acting in a manner which is disadvantageous to FPDR retirees. If we are successful in having the Court rule that this action is inconsistent with Oregon state law, it will simply require the FPDR Board to explore other options to satisfy the IRS.
Please note that individual members do not have to sign up to be part of this class action challenging the overpayment issue. If you qualify, you will automatically be included as a class member. If you wish to be excluded from the class, you will at some point (after we have filed the lawsuit) have an opportunity to opt out. Please continue checking this website for additional information.
