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MTA Employees Due Millions in Refunds After Pension Overcharge

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An MTA bus driver takes safety precautions in south Brooklyn, Oct. 1, 2020.

Ben Fractenberg/THE CITY

An MTA payroll error caused thousands of transit workers to be overcharged on pension deductions out of their paychecks for years, THE CITY has learned.

Now, nearly 8,000 employees are in line for around $4.1 million in total refunds — with interest — from their pension funds, according to the MTA.

The oversight affects approximately 7,700 workers in the so-called Tier 6 pension plan that was created by the state legislature in 2012. The law requires those enrolled in that plan to contribute 3% to 6% of their bi-weekly paychecks toward their pensions, while also capping pension contributions from overtime at $17,000 a year.

According to the Tier 6 plan for transit workers, employees pay deductions based on a 40-hour-a-week pay rate, plus overtime up to the $17,000 annual cap. 

But clerical errors dating back to 2015 resulted in money being automatically taken out beyond the cap from some workers’ paychecks, according to Transport Workers Union Local 100.

“It’s their screw-up and it’s been screwed up since the beginning,” Tony Utano, president of TWU Local 100 told THE CITY.

Checks Being Sent Out

An MTA spokesperson said refunds for affected employees — which include workers at bus depots in The Bronx and Manhattan — will come from the Manhattan and Bronx Surface Transit Operating Authority trust as well and the New York City Employees’ Retirement System.

“When we became aware of the issue, it was quickly addressed,” said the spokesperson, Andrei Berman. “Impacted employees ... will have any incorrectly withheld funds returned with interest.”

Affected employees include workers at bus depots in The Bronx and Manhattan.

Ben Fractenberg/THE CITY

He added that the MTA has “instituted process improvements” to prevent a recurrence of the error. Officials wouldn’t say exactly when the money would be refunded to affected employees.

A TWU spokesperson said some workers could be in line for thousands of dollars in refunds, depending on how much overtime they worked. 

“Many of our members will now be getting refunds with interest,” Utano said. “That’s what we demanded and that’s what we expect.”

Utano flagged the error  in a June letter to the MTA’s chief employee relations officer that asked for a written explanation of how contributions were withheld for those in the Tier 6 plan.

Figuring Out Who’s Affected

A spokesperson for the city’s largest pension fund, commonly known as NYCERS (New York City Employees’ Retirement System), said the fund was informed of the error in August by the MTA.

“The MTA is still working to identify the impacted population, after which NYCERS will obtain a list of member accounts where a refund of contributions on earnings in excess of the overtime ceiling may be due,” said the spokesperson, Deb Stewart. “Once NYCERS receives a complete report from the MTA, all affected member accounts will be fully reviewed and updates will be provided to those members.”

She added that the withholding of contributions on earnings that exceeded the overtime cap is not directly impacting other NYCERS-covered employers.

A second NYCERS spokesperson said that since the error was within the MTA payroll system, it affects workers covered by that system.

‘Show me the money!’

A spokesperson for city Comptroller Scott Stringer, who is on the NYCERS board of trustees, had been notified of the error by the pension fund.

A spokesperson for state Comptroller Thomas DiNapoli, who oversees pension funds for state employees, said “there is no issue” for MTA employees who are members of the New York State and Local Retirement System.

Impacted employees in the Tier 6 pension plan have yet to be notified by the MTA if they are eligible for reimbursements.

On a TWU Local 100 Facebook page, some employees grumbled about workers being overcharged for years.

“How in the world was this overlooked?” one posted.

“Show me the money!” another wrote.

CORRECTION: An earlier version of this article stated that employees were due to get $7 million in refunds, but the figure is only $4.1 million, MTA officials say.

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