Section 4450.10  Purpose

 

This Part prescribes the annual interest rate payable by a pension fund when a benefit was mistakenly set too low and the process to be followed in rectifying the underpayment of benefits.

 

Section 4450.20  Prescribed Interest Rate

 

This prescribed interest rate shall only apply to a benefit (and all subsequent benefits) that was mistakenly set too low if the first benefit is or was set on or after August 26, 2014.  The annual interest rate payable by an Article 3 or Article 4 pension fund is prescribed at 1% when a lump sum payment is made by a pension fund to the recipient pursuant to Sections 3-144.2(b) and 4-138.10(b) of the Illinois Pension Code when a benefit was mistakenly set too low.

 

Section 4450.30  Definitions

 

"Illinois Pension Code" or "Code" means 45 ILCS 5.

 

"Department" means the Illinois Department of Insurance.

 

"Lump Sum" means the one payment to the recipient by a pension fund when a benefit was mistakenly set too low. A lump sum payment shall consist of two amounts:

 

the difference between the mistakenly set too low benefit and the correct level benefit for each such benefit payment; and

 

the application of the prescribed 1% annual interest rate to the difference derived under this definition from the date of each mistakenly set too low benefit to the date of payment of the lump sum.

 

Section 4450.40  Policy and Notification

 

All Article 3 and Article 4 pension funds shall institute and maintain policies and procedures to discover and adjust any benefit that is set at an incorrect amount.  Any pension fund that discovers and adjusts, if otherwise allowable by law, any benefit pursuant to this Part, shall notify the Public Pension Division of the Department, by mail, of that adjustment of benefit within 45 days after making the lump sum payment or adjustment. This notice shall contain the lump sum benefit payment amount, the interest portion of that amount, the dates and amounts of the incorrect benefits, the adjusted and corrected benefit amounts, the nature and description of the mistake, and the name of the recipient and pension fund.