The Associated Press

SALEM - About 28,000 retired Oregon public employees will start seeing a 2 percent reduction in their monthly checks or be asked to set up plans to return overpayments amounting to $156 million.

The Public Employees Retirement System directors approved the plan Thursday to recoup overpayments made to retirees between April 2000 and April 2004, the Statesman Journal reported.

About 20,000 retirees from that period get monthly checks. They owe an average $6,650, and the repayments are expected to take about six years, according to PERS figures.

Others got lump-sum payments or other non-monthly payments, and they are to be asked for payment plans, the Statesman Journal said. Among those are beneficiaries of pensioners who have died, or the estates of pensioners.

An attorney for retirees said it's been years since many have gotten word from the PERS board about the overpayments.

"This is going to come out of the blue for many people," said Portland attorney Greg Hartman.

The issue stems from a dispute between the pension board and employers such as cities and counties over how to allocate earnings to member accounts.

A court ultimately set the rate, which was lower than the board had approved.

The board initially sought to recoup the overpayments by freezing cost-of-living increases. But in 2005, the Supreme Court ruled against that method.

Later court decisions upheld the system's right to collect overpayments through lump sums or reduced monthly benefits, and the Supreme Court ruled in October the pension system could begin collecting the money.

The money goes back into the system's trust fund.

PERS officials outlined a plan Thursday for hiring temporary employees to oversee collection efforts, staff overtime and possibly hiring private collection firms to pursue payment from people outside the state of Oregon who refuse to repay the money.

PERS Deputy Director Steve Rodeman said the collection efforts could cost $4 million.