Section 38.49. Retirement allowance; overpayment.

(1) If the retirement system pays a retirant or beneficiary more in a retirement allowance than he or she is entitled  to   receive,  the retirement system shall do both of the following:

(a)     Pursuant to MCL 38.41, immediately correct the error, notify the retirant or beneficiary of the correction of the error  and  provide   the retirant or beneficiary with his or her correct retirement allowance.

(b)     Not recover any overpayment to a retirant or beneficiary for those payments which the retirant or beneficiary received more than 6 years prior to the date of the notification to the retirant or beneficiary of the error by the retirement system except in each of the following situations when the retirement system shall recover the full amount of the overpayment:

(i)      If the member, retirant, or beneficiary misrepresented the information provided to the retirement system and the retirement system calculated the retirement allowance based upon that incorrect information.

(ii)      If the member, retirant, or beneficiary knew or should have known of the error and did not notify the retirement system of the error so that the retirement system could correct it.

(iii)       If the annual retirement allowance which the retirant or beneficiary received was greater than the retirant's final average compensation.

(2)       The retirement system shall recover the entire amount of the overpayment received by the retirant or beneficiary in the situations set forth in subrule (1)(b)(i), (ii) and (iii) of this rule by adjusting future payments to the retirant or beneficiary in such a manner that the actuarial equivalent of the correct benefit is paid. For purposes of determining the actuarial equivalent retirement allowance, the  actuarially   assumed interest rate shall be 8% with utilization of the 1983 group annuity and mortality table.

(3)      Except as provided in subrule (1)(b) of this rule, depending upon which is most beneficial to the retirant or beneficiary, the retirement system shall recover the overpayment received by the retirant or beneficiary during the 6 years prior to the date of the notification of the error  by doing either of the following:

(a)     Allowing the retirant or beneficiary to repay the overpayment in 1 lump sum.

(b)      Reducing the retirant's or beneficiary's correct monthly retirement allowance by 1 of the following:

(i)         The same percentage as results from the amount of the highest monthly overpayment divided by the comparable actual monthly payment until the amount of the overpayment is recovered.

(ii)       To the actuarial equivalent of the benefit calculated pursuant to MCL 38.41. For purposes of determining the actuarial equivalent, the actuarially assumed interest rate shall be 8% with utilization of the 1983 group annuity and mortality table.

History: 2008 AACS.