Retirees from AT&T are being hit with hefty repayment demands after they were overpaid on their pensions, and if they can't repay the money immediately, they're hearing from collection agencies.
Pension lawyers, retiree advocates, and some former Treasury Department officials say it's unusual for major corporations to enlist collection agencies to recover such funds, reports The Wall Street Journal. Retirees, meanwhile, said they collected the payments through no fault of their own, and for the most part have already spent the funds on medical expenses and other necessities.
Retiree James Mizelle of Virginia told The Wall Street Journal that he started drawing a pension in 2001 from his 27-year-long career with the corporation, but 15 years later, A&T sent him a letter saying his benefits had been miscalculated and that he now owed $32,116.05 for the overpayments.
Mizelle, 70, said he could not repay the pension, and soon the collection agency calls started.
Mizelle is one of hundreds of former employees AT&T is pushing for repayment.
AT&T and its pension plan record keeper, Fidelity Investments, are demanding $1 million combined from 17 retirees alone. The retirees have sought help with the Pension Rights Center in Washington, D.C., and other related groups.
However, an AT&T spokesman said the overpayment demands are affecting "significantly less than 1/10th of 1 percent" of its 517,000 pension participants, and only a small number of them have been referred to collections.
He would not say, however, how much money is involved or how the company found its errors. Former AT&T information technology analyst Sydney Smith said she got a letter in July claiming she owed the plan $19,306.95. The company later told her she had put a date in the benefit website that she should not have been able to use.
She said she asked for a repayment plan and was told she could make two payments of $10,000 each, which she did not have. After that, Smith said, she started to get calls "pretty constantly" from Lyon Collection Services, the agency that contacted Mizelle.
Lyon President Rick Mantin said his firm is following government laws on collections, and while his employees are persistent, they do not harass customers or focus on retirees.
Fidelity, meanwhile, said that not recouping the funds meant "there would be fewer funds available for distribution to other participants."
Pension lawyers, meanwhile, say that plan administrators are wary about giving retirees a break, pointing to IRS guidelines suggesting that plans have to either seek the repayments quickly or lose some key tax benefits, such as deductions for employer tax funds.
AT&T currently has $45 billion in its assets, or enough to pay off about 77 cents on each dollar of benefits earned.
The company says its approach is "common and similar to how other companies handle" the overpayment issue and are following federal pension rules.
The Treasury Department and IRS in 2015 issued guidance saying companies can recover the overpayments in other ways, including billing contractors for the errors. Companies also may replace the overpayments themselves or modify rule plans.
Sandy Fitzgerald ✉
Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics.
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