Certain state laws mandate that benefits established for public officials or public servants not be paid to those individuals convicted of a felony, especially any crime that arises in connection with a job or service with an agency. For example, in Illinois, you won’t be paid your pension benefits if you are tried and convicted of a crime that was related to your job as a firefighter or police officer.
Items Covered in this Article:
- Why Pension Benefits are Denied
- Pension Contributions: What the Law Says
- Pension Funding Cannot be Reinstated Once a Refund is Made
- How a Pension Fund Works
- Service as an Employee: How It Affects an Employee’s Benefits
Why Benefits are Denied
With that being said, each case’s facts must be carefully scrutinized before benefits are denied. A commonly litigated aspect of this law is whether or not a felony arose as the result of public service.For instance, one case that was appealed in 2001 involved a Chicago police lieutenant who had been convicted of mail fraud and was denied benefits from his pension fund. In this instance, the court found that the officer’s conviction was associated with his duty as a police officer.
Because the officer knew about the fraud and did not report it, but, instead, participated in the activity, his benefits weredenied. However, that does not mean that felons cannot receive the monies they paid into a fund.
Pension Contributions: What the Law Says
For example, in one case, a judge, who was convicted of a felony that was connected with his job sought to obtain a refund for the amount of money he put into his pension fund. In this situation, the judge had received approximately $75,000 in pension benefits during his retirement when he was convicted.
The Supreme Court of Illinois eventually found in the judge’s favour, awarding him a total refund of $110,000 for the monies he had paid into his retirement fund. The decision for returning paid monies is usually upheld in similar cases involving firefighters and police officers as well.
Pension Funding Cannot be Reinstated Once a Refund is Made
However, if you have been denied pension benefits but did receive a refund for your contributions, you cannot be reinstated into the fund. Once you have the money you paid into the fund refund, your association with that form of funding is no longer applicable.
Therefore, pension benefits can be forfeited if the felony involved a crime that was connected to the felon’s employment. However, any monies or contributions a felon has made into the fund can be reimbursed. He cannot by law, reinstate his membership into his retirement account.
How a Pension Fund Works
Both investment firms and life assurance companies offer pension plans for peoples’ retirement accounts. Fund managers are also employed to invest contributions in one or more pension funds. Funds are used to buy or sell assets, such as bonds, property, shares or cash. There are a variety of pension funds, each which invests in various mixes of assets. For example, a typical fundmay have half the assets invested in shares, 30% invested in bonds, 15% going toward property and the remaining 5% going toward cash.
Fund values rise and fall regularly, depending on a share’s performance. Funds are reduced by charges and fees that must mandatorily be paid. Therefore, a pension is a long-term savings vehicle that is normally maintained for 20 or more years, all which gives investors the ability to recover any monies paid during the investment years.
Most felons who have foregone their pensions were older when the benefit was denied. Therefore, the amount they had paid into the fund was usually sizable. While most pensions are started at 30, many people will begin making contributions as late as 40 as well.
Felons, therefore, usually do not forego their pensions if their crimes were unrelated to their jobs. However, some controversy has existed in the past about felons who have worked in public service jobs where they held more than one job or position.
Service as an Employee: How It Affects an Employee’s Pension Benefits
In the case, Wells v. Board of Trustees of the Illinois Municipal Retirement Fund, Timothy Wells, the defendant, had held four different jobs when he worked for the Village of Antioch during his tenure, thereby collecting service credits for each of his positions. He later pled guilty to two felony charges related to his final job as village administrator.
All of Wells’ pension benefits, however, were terminated. Wells appealed the decision, saying that the court should have only forfeited the benefits he was entitled to during the time he committed his crimes. However, because “service as an employee” involves the total time an employee serves a company or agency, all the employee’s benefits are denied, including any benefits the former employee is due before a crime is committed.