The State Employees' Retirement System notified Sandusky by letter that his crimes triggered forfeiture of his pension. The former Penn State assistant football coach was sentenced Tuesday to at least 30 years in prison for molesting 10 boys.
The retirement system told Sandusky he will no longer receive his $4,908 monthly annuity and informed his wife, Dottie, she is no longer entitled to a survivor's benefit.
Sandusky's lawyer, Karl Rominger, contended the agency has no legal grounds for revoking the pension and said Sandusky will fight any attempt to do so.
"It's my inclination to believe that they are just going through the motions to try to throw some red meat to the public, but they know they are going to lose," Rominger said.
Pennsylvania's pension forfeiture law, originally passed in 1978, primarily applies to public employees convicted of a financial crime related to the office "or when his public employment places him in a position to commit the crime."
Since 2004, it has also applied to any public school employee convicted of a sex crime against a student.
In its letter to Sandusky, the retirement system said it had determined that two of the criminal charges of which Sandusky was convicted - involuntary deviate sexual intercourse and indecent assault - fell under the forfeiture law.
It also said Sandusky maintained extensive ties to Penn State after his 1999 retirement, qualifying him as a "de facto" employee subject to forfeiture for crimes committed even when he was no longer on the university's payroll.
SERS' letter to Sandusky was released to The Associated Press in response to an open-records request.
Rominger argued in part that since Sandusky wasn't convicted of molesting a Penn State student, the forfeiture law does not apply to him. Sandusky's young victims came to him through The Second Mile, his charity for troubled youth.
"It did not involve students where he worked, and that's going to be the crux," Rominger said.
But Philadelphia attorney Alaine Williams, an expert on public employee labor law, said courts have broadly construed the forfeiture law.
"I think he's got a very serious problem," she said ahead of the retirement system's announcement.
Sandusky entered the State Employees' Retirement System when he began working as a Penn State football coach in 1969. He collected a $148,000 lump sum payment when he retired from the university in 1999, and began receiving a monthly annuity, according to records provided by SERS. Sandusky received a total of $900,000 in pension payments between 1999 and September 2012.
The forfeiture statute permits an employee to keep his or her contributions without interest, minus any fees or restitution association with the employee's conviction. Employees subject to forfeiture can appeal to the board of the State Employees' Retirement System, then through the state court system.