Sandusky, 70, was convicted in June 2012 on 45 of 48 counts related to sexual abuse of young boys.
A hearing examiner recommended in June that Sandusky's pension benefits be reinstated on the grounds that Sandusky was already retired from Penn State when the state added sex crimes against students as a triggering offense in the state's pension forfeiture act.
The SERS had determined that Sandusky was still a de facto employee after he formally retired in 1999.
Sandusky's lawyer told the AP that he plans to file a lawsuit challenging the decision. His wife, Dottie, would be entitled to earn half of Sandusky's benefits when he passes away.