City of Sacramento Overpaid Retired Government Workers for Years

In what The Sacramento Bee calls an “embarrassing error,” the city of Sacramento has acknowledged that it overpaid hundreds of retired city workers for several years, costing the city’s pension fund millions of dollars.

The Bee explained: “The problem is with the city’s old retirement system – in place before the city joined the California Public Employees’ Retirement System – which still covers about 1,100 retired city employees. Since at least 2005, about 5 percent of them have been underpaid and nearly 18 percent have been overpaid. Most significantly, payments to 200 early retirees weren’t reduced at age 62 to account for Social Security benefits. … In the past three years, a total of $2.8 million has been overpaid and $247,000 underpaid.”

The city sent letters to notify affected retirees about the problem, and said that those who received overpayments will not have to return the money, as long as they agree not to sue the city. For those who were underpaid, the city proposed to give a lump sum of three years’ worth of underpayments, plus 6.5 percent interest. About 90 percent of the affected retirees have taken the deal so far. (Source: The Sacramento Bee, July 22.)


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