Audit Report on the New York City Police Pension Fund’s Controls Over Identification of Improper Benefit Payments To Deceased Recipients

November 22, 2021 | FN20-106A

Table of Contents

Executive Summary

The New York City Police Pension Fund (PPF) was established to provide pension and supplemental benefits to full-time uniformed employees in the New York City Police Department (NYPD). PPF uses the Comprehensive Officer Pension System (COPS) to maintain active and retired members’ information.

PPF processes monthly pension payments through New York City’s (City’s) Pension Payroll Management System (PPMS) and terminates benefit payments in PPMS after a benefit recipient dies.[1] PPF identifies a benefit recipient as deceased through the following means:

  • Notifications from the decedent’s family and NYPD;
  • 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 two contracted vendors—Lexis Nexis and the National Association for Public Health Statistics and Information Systems (NAPHSIS);
  • Non-responsiveness to a PPF mailed request to a benefit recipient to provide a completed affidavit, also called an attestation, as proof the benefit recipient is alive.[3]

During Fiscal Years 2019 and 2020, PPF paid $3.28 billion and $3.49 billion, respectively, to approximately 55,000 benefit recipients.

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

Audit Findings and Conclusion

Although PPF has established control procedures to detect and prevent improper pension benefit payments to or in the names of deceased recipients, those procedures have limitations that hinder PPF’s ability to identify deceased recipients timely, which increases the risk that PPF funds are improperly paid out and never recouped. The audit identified two deficiencies in PPF’s control procedures: (1) PPF’s infrequent use of contracted third-party death-matching services; and (2) PPF’s practice of applying its supplemental control procedure—obtaining affidavits as proof of life—primarily to recipients who live overseas, who collectively represented less than 0.3 percent of the total number of PPF’s benefit recipients during the audit scope. In addition, the audit found that PPF does not always maintain accurate names, SSNs, and/or DOBs for benefit recipients in PPMS.

Deficiencies in, and non-compliance with, the control procedures in place increase the risk that PPF may issue unwarranted payments in the names of deceased benefit recipients.

In another matter, we found that PPF might benefit by centralizing death match service contracts with the City’s four other retirement systems.

Audit Recommendations

To address these issues, we recommend that PPF should:

  • Use a third-party death-matching service on a regular basis to timely identify decedents whose deaths are not reported in SSA’s Limited Access Death Master File (LADMF) and consequently may not be identified in the Death Match reports generated through the City Human Resources and Management System (CHRMS).
  • Request attestation affidavits from a broader segment of the overall population of benefit recipients based on risk-assessment criteria, such as benefit recipients whose ages exceed PPF’s actuarial benchmarks for life expectancy.
  • Send affidavit requests periodically to all benefit recipients who live overseas.
  • Conduct a comprehensive review of beneficiaries’ personal information that PPF uses to administer pension payments, including names, SSNs, and/or DOBs, maintained in PPMS and compare it with external records as needed to ensure such information is accurate.
  • Correct all SSN and DOB issues that were identified in this report.
  • Consider coordinating with the City’s four other retirement systems, as well as FISA-OPA, to centralize death match service contracts and potentially obtain comprehensive death match data at a lower overall cost.

Agency Response

PPF did not directly state whether it agreed with and would implement the six recommendations in this report, but it expressed at least partial agreement with five of them (all except for Recommendation #3, that it send affidavit requests periodically to all benefit recipients who live overseas) by describing the corrective actions that it has taken and will take to address the corresponding issues found in this report.

[1] A benefit recipient can be a retiree or a beneficiary who receives pension benefits after a retiree dies or pursuant to a court order.

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

[3] PPF sends affidavit requests to benefit recipients who are living overseas. Additionally, PPF sends address confirmation requests to benefit recipients: (1) who did not cash pension checks for more than three months; or (2) whose mail was returned by the United States Postal Service.

$279.67 billion
Dec
2024