My pension benefit was overpaid by 1/3 for over two years by a Fortune 500 company. I questioned the amount when I first retired as it was higher than I anticipated. I was assured it was correct. Now, nearly 2 1/2 years later, the company has finally realized its error and wants to recover the overpayment.
I have conducted my lifestyle and life choices based on this additional income. My position financially is very different than it would have been if I had the correct information when planning my annual budgets for the last three years. Adjusting to the lowered income is something I accept that I have to deal with, however, repayment of the well over 100,000 they claim to have overpaid me will cause financial disaster for me. They have not 'opened the door' for communication.
I have tax implications, Katrina loss implications, large charitable contributions, among other life altering expenditures I would not have made had I the proper information.
Should I contact a lawyer? What kind of lawyer?
They have already reduced the income for last month (December) and this month's deposit is late.
I fear they intend to withhold all or a sizable portion of my pension payment until they have 'reimbursed themselves'.

This is between you and the retirement plan. Wage and hour laws are applicable only to wages, which this is not. Couldn't hurt to see an attorney about your options, though.

The fact that you already spent the money and it would be a hardship to repay is not going to be a factor in determining whether or not you must repay. If you had been underpaid I'm sure you would want that money that was owed to you. How the money may be recouped depends on the plan. Most I've dealt with will suspend paying benefits until the overpayment is made up but that does not mean that is how your plan will work.