Audit Report on the New York City Fire Pension Fund’s Controls over Identification of Improper Pension Payments to Deceased Recipients

Executive Summary

The New York City Fire Pension Fund (FPF) was established to provide pension benefits for full-time uniformed employees of the New York City Fire Department (FDNY) and to provide other supplemental benefits to qualified retired Firefighters, Wipers, and Fire Officers. Starting in 2012, the FPF has utilized FDNY’s Electronic Uniform Pension System (EUPS) to maintain active and retired members’ and beneficiaries’ information.

The FPF processes monthly pension payments through the City’s Pension Payroll Management System (PPMS) and terminates benefit payments through PPMS after a benefit recipient dies. The FPF identifies a benefit recipient as deceased through the following means:

• Notifications from the decedent’s family, union, and FDNY;^[1]
• HR-11 SSA (Social Security Administration) Death Match reports generated through the City Human Resources and Management System (CHRMS);^[2]
• Death match reports provided by a contracted vendor—Pension Benefit Information, LLC (PBI);^[3] and
• Non-responsiveness to the FPF’s mailed request to a benefit recipient to provide a completed affidavit, also called an attestation, and a copy of a Social Security or medical insurance card as proof the benefit recipient is alive.^[4]

During Fiscal Years 2019 and 2020, the FPF paid $1.46 billion and $1.53 billion to approximately 18,000 benefit recipients, respectively.

The objective of this audit was to determine whether the FPF had adequate controls in place to identify improper benefit payments to deceased recipients.

Audit Findings and Conclusion

The FPF has adequate control procedures in place to identify and prevent improper pension benefit payments to deceased benefit recipients, provided those procedures are consistently followed. However, we found that the FPF: (1) did not consistently send affidavit requests to all benefit recipients who are aged 80 and over; and (2) did not follow up on outstanding affidavit requests after 90 days.

In addition, we found two areas in which the information systems the FPF uses for record-keeping and control activities related to its administration of pension benefits either contained inaccuracies or lacked comprehensive data. Specifically, we found that:

• PPMS contained inaccurate Dates of Birth (DOBs) for 76 benefit recipients; and
• the FPF cannot utilize EUPS to determine the accuracy of the benefit recipients’ information maintained in PPMS.

In another matter, we found that the FPF’s death matching process might be improved by its joining with the City’s four other retirement systems to centralize their death match service contracts.

Audit Recommendations

To address these issues, we make the following five recommendations that the FPF should:

• Use benefit recipients’ DOBs when preparing the affidavit requests to ensure that it sends affidavit requests to all benefit recipients, including parent-beneficiaries, who are aged 80 and above in accordance with existing FPF control procedures.
• Follow up timely in all cases when benefit recipients do not submit the requested affidavits within 90 days and establish alternate procedures to ensure continuous affidavit review and follow-up procedures during emergencies.
• Ensure that DOBs are corrected in PPMS and all relevant information systems for the 76 recipients of pension payments this audit identified with invalid DOBs in PPMS.
• Consider entering in EUPS standard required data for all members who retired prior to EUPS’ 2012 implementation to enable that system to serve as a comprehensive, current information system accurately reflecting all members and beneficiaries receiving pension payments from the FPF and to enable the FPF to monitor its payments and prevent unauthorized payments in the names of deceased recipients more effectively and efficiently.
• Consider coordinating with the City’s four other retirement systems, as well as Financial Information Services Agency (FISA), to centralize death match service contracts and potentially obtain comprehensive death match data at a lower overall cost.

Agency Response

The FPF agreed to implement four of the five audit recommendations (Recommendations #1, #3, #4, and #5). The FPF disagreed with the audit’s finding that it did not follow up on outstanding affidavit requests, and with the recommendation that the FPF follow up timely in all cases when benefit recipients do not submit the requested affidavits within 90 days and establish alternate procedures to ensure continuous affidavit review and follow-up procedures during emergencies, (Recommendation #2). Nevertheless, the FPF also stated that it “intends to review emergency procedures for the inclusion of continuous affidavit review.”

Endnotes

[1] The FPF receives: (1) monthly notifications from the union when a decedent’s family applies for death benefits; and (2) notifications from FDNY when a decedent’s family invites fellow firefighters to attend the funeral or when family members claim City-procured life insurance benefits through FDNY.

[2] The SSA Death Match Report matches each active benefit recipient’s name, Social Security number, and date of birth with the SSA Limited Access Death Master File.

[3] PBI generates a weekly list of definite or potential matches based on the death information provided by the Social Security Administration, states’ vital records offices, and obituaries.

[4] The FPF sends affidavit requests to benefit recipients who are 80 years of age and older and to individuals whose benefit payments are returned by the banks.