Tower Legal on Invalidation of Pension Transfers
CHICAGO, Sept. 1, 2015 /PRNewswire/ -- An appellate court issued an opinion invalidating a long used policy regarding the right of public employees to transfer pension credits. According to one involved attorney, "it could open a Pandora's Box of litigation adversely affecting hundreds of innocent retirees."
On June 26, 2015 a reviewing court invalidated an Illinois Municipal Retirement Fund (IMRF) policy initiated by Louis Kosiba, IMRF's Executive Director, granting individuals the right to combine retirement benefits by transferring past service credits of other public retirement funds into IMRF one time after retiring. The appellate court affirmed a circuit court judge who ruled the Illinois Pension Code only allowed active employees to purchase credits.
The dispute arose when prior to his retirement IMRF permitted, approved and guided a former Oak Brook police chief with the transfer of his past municipal pension credits into IMRF. Rather than take a full year Thomas Sheahan transferred funds within days of retirement. Eight months after IMRF began paying his annuity, the Village of Oak Brook contested the validity of the transfer in court. The court's ruling invalidated Sheahan's pension.
"This isn't just about my client; if the appellate decision stands hundreds of other unsuspecting IMRF pensioners are in jeopardy," said Sheahan's attorney Lonny Ogus.
Ogus explained, "Like hundreds of thousands of pensioners across the state, Tom Sheahan kept up his end of the bargain and followed all the rules." In the ruling, the court determined that the Sheahan had done nothing improper and followed rules IMRF had established. Ogus said that other pensioners who availed themselves of this policy might be in for a shock. Mr. Ogus continued, "IMRF has done nothing to stop paying those who did the same thing as my client, and is apparently paying them improperly."
Ogus further asserted that if IMRF stopped paying the affected retirees- those "hundreds" will likely sue over the termination of their pension as what they did was fully authorized by IMRF. Ogus stated, "My client did nothing wrong and neither the circuit court or the appellate court found that he did anything but listen to IMRF employees and act on their instruction following their rules exactly." This ruling could also invite suits from local units of government seeking to curtail pensions of employees who used this policy to enhance their annuities.
SOURCE Tower Legal
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