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Subject:  Another reason to save for retirement Date:  10/25/2013  11:27 PM
Author:  aj485 Number:  73642 of 88775

There have been questions about how much social security will be available in the future, and if pensions will really be able to meet the obligations that they have committed to. But even if your pension remains funded, it appears that if they make a mistake in calculating your payment and overpay you, they can require that you repay them, with interest. And they can effectively garnish your pension payment, by cutting your payment down to what it should have been and then withholding even more in order to get their repayment:

In April 2011, New Jersey resident Carol Montague received a letter from American Water Works Co.'s pension plan saying it had overpaid her for more than five years and wanted its money back -- plus interest. Montague, now 67, was told she owed roughly $45,000.

Two weeks later, Montague's pension benefits dropped from $1,246 to around $325 a month, or half what she should have been paid all along. The plan takes out roughly $300 a month in order to pay itself back.

Once Montague's health care premium is deducted, her monthly pension check shrinks to less than $25. She gets another $1,200 a month from Social Security, but it's not enough. So, in addition to her part-time job as a school crossing guard, she is working as a salesperson at Macy's.

So far, Montague has repaid almost $9,000 -- calculations show that she won't repay her debt in full until 2024.

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