The Alaska Division of Retirement and Benefits is reminding snowbirds that they live in a gilded cage.
In a newsletter sent last month to members of the Public Employees Retirement System and Teachers Retirement System, the division said retirees are responsible for repaying any money accidentally overpaid by the state’s retirement systems. The newsletter cited a 2017 decision by the Alaska Office of Administrative Hearings.
The warning covers approximately 48,000 state retirees, about 60 percent of whom live out of Alaska for at least part of the year, said state pension director Kathy Lea.
“We felt it was worth knowing that all of our membership know that you can’t say ‘I didn’t know,’” she said. “You still are responsible for paying attention to what your benefit is.”
State law already requires the pension system to claw back overpayments from retirees, but someone who is overpaid can apply for a waiver under certain circumstances. In the 2017 case, a woman who had moved to Vermont in 2010 still received the special cost-of-living bonus granted to retirees who stay in Alaska. The woman, identified only as “Ms. W,” received that bonus for six years before a routine address change revealed the problem.
The state required her to repay six years worth of cost-of-living adjustments, a total of $14,683.
She appealed the decision but lost. Writing the decision in the case, administrative law judge Kathryn Kurtz concluded that “given the amount of information (the retirement system) provides to all retirees … Ms. W had reasonable grounds to know that her benefit was being overpaid and that the division’s records were incorrect.”
Speaking by phone on Friday, Lea said Ms. W’s case isn’t unique, but the amount was unusual: Most cases involve only a month or two of overpayments, not six years.
“Quite frankly, we don’t like to have to collect the overpayments because it can be a hardship for some members,” she said.
The state’s pension rules allow a retiree to collect the in-state bonus if they are a resident of the state and live in Alaska. If they live out of the state for 90 consecutive days, they lose the benefit until they return. When they return, the benefit returns instantly.
“There’s no requirement to be in state for a certain number of months,” she said, comparing it to the Permanent Fund Dividend.
While Ms. W’s case involved someone who moved out of the state permanently, the implications of the administrative decision fall hardest on snowbirds, those Alaskans who live in the state during the warm months before moving south for the winter. For those residents, there are greater chances of a cost-of-living error.
Lea said the state has upgraded its software and protocols in recent years to detect those errors.
“We’re not being more aggressive,” she said. “We have better tools … automated processes that make it easier for us to tell.”
Despite those tools, it will remain the responsibility of pensioners to determine their correct payments and whether they are receiving them.
• Contact reporter James Brooks at email@example.com or 523-2258.