Any member required to repay an overpayment of benefits may choose one of the following repayment methods: (1) Immediate repayment in a lump sum from other funds; (2) Repayment by monthly installments over a period not to exceed three years, plus interest at the system's assumed rate of return; (3) Repayment by monthly benefit reductions over a period not to exceed three years, plus interest at the system's assumed rate of return; or (4) Repayment by an actuarial equivalent reduction in monthly benefits as follows: (a) If the member is a foundation member and does not have a spouse, the reduction must continue for the member's lifetime. If the member is a foundation member with a potential surviving spouse benefit payable, the reduction must reduce both the member's monthly benefits and the surviving spouse's monthly benefits and must continue for both the member's and the surviving spouse's lifetimes; or (b) If the member is a generational member and elected a single life benefit, the reduction must continue for the member's lifetime. If the member is a generational member with a joint and survivor benefit payable, the reduction must reduce both the member's monthly benefits and the surviving spouse's monthly benefits and must continue for both the member's and the surviving spouse's lifetimes. If a member required to repay an overpayment does not choose a repayment option within two months after being given notice of the overpayment, the member is deemed to have chosen to make repayment by an actuarial equivalent reduction in monthly benefits. If repayment is pursuant to an actuarial equivalent reduction by either the member's choice or the member's failure to choose a repayment option, system staff must inform the member that the reduction is unlikely to result in repayment of the exact amount of the overpayment, plus interest if appropriate, and the member is presumed to understand. If repayment is delayed for more than three months, interest on the overpayment amount must accrue during the period of delay at the system's assumed rate of return. If any overpayment is due to a system error, the executive director may absolve any interest accrual.
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