Kadner: Union tells retirees to repay pension
By Phil Kadner email@example.com October 29, 2013 9:16PM
Updated: December 1, 2013 8:20AM
Imagine a retired man going to his mailbox one morning and finding a letter informing him that a mistake has been made in his pension payments and he owes more than $100,000.
No joke. And it’s not some scam.
“I darn near had a heart attack,” recalled Ron Kosinski, 79, a former sheet metal worker who was notified that he owes $105,500.
Kosinski didn’t do anything wrong. His union, Sheet Metal Workers Local 73, miscalculated his pension payments when he retired 17 years ago.
In fact, dating to 1974, the union’s pension fund overpaid 589 retirees by about $5 million.
And now it’s trying to collect — not only the amount overpaid but 7 percent interest on that money.
Beverly attorney Tim Kelly, of Scannell & Associates, is preparing a lawsuit on behalf of some of the retirees.
“You’re talking about widows and elderly people,” Kelly said. “It’s blatantly unfair, and the pension fund doesn’t have to do this, although it’s claiming the IRS ordered them to collect the overpayments.”
These are not people who retired on pensions of $100,000 a year or more.
Ed Cochran, 63, who lived in Chicago’s Garfield Ridge community before retiring, was getting a pension check of $1,300 a month before he was notified that his payment had been miscalculated.
“So now the check is $1,057.50 a month, but they’re taking 25 percent of that to repay the fund for the money I was overpaid. So that leaves me with less than $800 a month,” Cochran said.
And Local 73 added insult to injury by including another message in Cochran’s overpayment notification.
“Because you’re 63 years old, the chances are you will not live another nine years and six months to complete the repayment schedule, they stated in the letter. So please send us a check for $66,721 as a lump sum payment,” Cochran said.
“Well, we’re all going to die, I know that. But to hear someone say I’m expected to die in nine years and six months so please hurry up and send us a check, well, that was depressing.”
As a sheet metal worker, Cochran said he primarily worked in high-rise buildings installing duct work and exhaust fans.
“Your work life is cut short on those jobs because you’re going up 50 stories and sometimes the hoists break,” Cochran said. “So you have to walk all the way down or, if it happens at lunch and you went downstairs, you have to walk 50 stories up to retrieve your tools.
“There are no heated break rooms, no heated lunch rooms, even the toilets aren’t heated. You use port-a-potties that are usually spaced every five floors.
“Most guys learn early on to go to the washroom before work because in winter you don’t want to be using one of those toilets.”
Cochran became a sheet metal worker the day after he graduated from Kennedy High School.
Like several of the retirees I spoke with, he’s angry with the union because, as the result of an audit, it knew in 2004 that overpayments had been made dating to 1974.
“If they had corrected the situation in 2004, if they had adjusted our pension payments correctly even then, we wouldn’t be facing these stiff penalties and giant lump sum payments,” Cochran said.
It wasn’t until June of this year that Local 73 sent the notices to the pensioners. Along with the overpayments, more than 800 retirees were underpaid and are receiving compensation.
The union is hearing appeals based on hardship, but Kelly said to qualify “you have to be pretty close to destitute.”
“If you have a home or savings, they want the money,” he said.
Letters sent to the retirees stress that federal law requires the union to fix the errors in the pension fund.
“More specifically,” the letters state, “the Internal Revenue Service (IRS), which has authority over the fund, has reviewed the errors discovered in the audit” and issued a “compliance statement to take certain action to fix the error in your pension.
“The IRS does not tell unions how to address errors in their pension funds,” Kelly said. “The union basically notified the IRS that there was an error and here was how they were going to address it and the IRS said fine by us.”
When I called the Local 73 office to get an explanation, I was told “no comment.” When I asked to speak to an officer in the union, I was told “no one here is going to comment.”
Most alarming is that there are apparently no federal regulations about how many years back a pension fund can go to correct errors it has made in pension calculations,
Don Sorrentino, a retired sheet metal worker who used to live in Oak Lawn, said he was notified he owes $55,630.70 for overpayments since 2002. His pension check had been $1,970 a month but has been reduced to $1,097 after adjustments and deductions for overpayments were calculated.
Kosinski, the 79-year-old retiree, said he got married late in life and has a daughter headed to college.
“Her college fund is going to have to pay that $105,500” (he owes), Kosinski said. “It’s not right because they’re going after people who can’t fight back.
“You’re talking about some people who might not even be able to get out of bed or understand a letter like this. You’re talking about people who are battling cancer, all the maladies that come with old age, who have budgeted for retirement, and now they get this.”
Kelly said he had never heard of a pension fund going back 30 years to get reimbursed by retirees.
“But as far as I can determine there are no laws against it,” he said. “But there are other ways they could have balanced the accounts in the retirement fund.”
Federal laws were enacted to protect retirees from having their pension funds misappropriated by pension managers.
But what’s happening to the retirees in Local 73 could apparently happen to anyone.