Audit Report on Pensioners of the New York City Employees’ Retirement System Working for the City after Retirement – January 1, 2014 to December 31, 2014

Executive Summary

The objectives of this audit are: (1) to identify New York City (City) pensioners who may be reemployed by a City agency and simultaneously illegally collecting a pension from the New York City Employees’ Retirement System (NYCERS); and (2) to quantify the amount of any improper payments to such individuals who appear to be violators of the New York State (State) Retirement and Social Security Law (RSSL) §211 and §212 or New York City Charter §1117 during Calendar Year 2014.

NYCERS provides retirement benefits to full-time employees who work for the various New York City agencies.  The reemployment of retired public employees in public service is governed by the RSSL¹.   Specifically, under RSSL Article 7 §212, a service retiree (a person receiving retirement benefits rather than a disability retirement) who is under the age of 65 can be reemployed in New York public service subject to an annual $30,000 earning limitation.  This means that a NYCERS member who is not collecting a disability pension and is under age 65 may collect his/her pension and work for the City or State so long as he/she does not earn in excess of $30,000 per year from a public service position.  If an under-65 service retiree earns in excess of $30,000 per year from a City or State public service position, the pension payments should be suspended unless the retiree has obtained a waiver under the RSSL².

Disability retirees are not subject to RSSL §211 and §212, but rather in New York City are subject to the New York City Charter §1117, which prohibits a retiree from earning more than $1,800 a year in New York public service unless the retiree’s disability pension is suspended during the time of such employment.  A retiree’s disability payments are included in the calculation of whether the $1,800 cap has been exceeded.

Audit Finding and Conclusion

Our audit found one NYCERS disability pensioner who appeared to have violated New York City Charter §1117.  This pensioner received $2,588 in post-retirement earnings for Calendar Year 2014, which resulted in $4,364 potential pension overpayments to this pensioner.  The total amount of improper 2014 disability pension payments were calculated based on an analysis of when the reemployed pensioner reached the legal earnings limit of $1,800, and did not suspend pension payments during the applicable period of reemployment.

In addition, the audit found that of the approximately 134,500 NYCERS pensioners whose birth dates are maintained in the City’s Pension Payroll Management System (PPMS), 53,910 were different from the birth dates contained in NYCERS’ records.  When we informed NYCERS officials of these birth date discrepancies, they stated that the majority of the discrepancies appeared to be the result of “dummy data” in PPMS.  They said that the correct birth dates appeared to be in NYCERS records and that where different dates appeared in PPMS, those dates were most likely incorrect.  This is of particular concern because inaccurate birth dates could affect any analysis that relied on PPMS to determine whether a pensioner may be in violation of RSSL §211 and §212.

Audit Recommendations

To address the non-compliance issue, we recommend that NYCERS:

• Investigate the individual identified in this report as a potential double dipper; if the person is found in violation of State or City regulations, commence recoupment action for the relevant periods.
• Send special reminders to service retirees under the age of 65 and disability retirees to detail their responsibilities regarding compliance with public service reemployment requirements.
• Take appropriate action to insure that birth dates maintained in all databases are correct, including, if necessary, contacting the pensioners to determine the correct birth dates of the 53,910 identified in this report whose birthdays in NYCERS’ records are different from the information maintained in PPMS.

Agency Response

NYCERS officials generally disagreed with the findings and recommendations in the report.  In doing so, they cited criteria for disability pensioners’ earning limitations different than the criteria relied on by the audit.  NYCERS officials contend the criteria they cited is applicable to the one pensioner whose payments were questioned.  In addition, NYCERS officials maintained that the birth date inconsistencies identified in the audit would not affect the accuracy of NYCERS payments because they claimed that they rely on only correct data they maintain.  However, with regard to our second recommendation that NYCERS send a special notice of pertinent rules to it members, NYCERS stated that it does send such a special notice out and provided us with information detailing the steps that it had taken and will be taking to inform their members regarding the reemployment restrictions.

Auditor Response

While NYCERS’ relies on a December 2005 memorandum from the New York City Law Department to support its interpretation of applicable pension law as it relates to the payments questioned in this audit, the Comptroller’s Office disagrees with the City Law Department’s analysis for the reasons set forth in the written opinions of the Comptroller’s Office of the General Counsel dated June 27, 2005 and April 5, 2006.  We urge NYCERS to reconsider its position and practice based on the analysis provided by the Comptroller’s Office of the General Counsel.

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