Audit Report on the Non-Pedagogical Pensioners of the New York City Department of Education Working for the City After Retirement
EXECUTIVE SUMMARY
The objectives of this audit were to identify New York City pensioners who may be re-employed by a City agency and simultaneously illegally collecting a pension from the New York City Board of Education Retirement System (BERS)-post-retirement City employees who do not comply with all necessary employment regulations are known as “double-dippers”-and to quantify the amount of any improper payments to such individuals who appear to be violators of the New York State Retirement and Social Security Law (RSSL) §211 and §212, or New York City Charter §1117 during Calendar Year 2014.
BERS provides retirement benefits to non-pedagogical civil service employees who were employed by the City of New York and School District for the City of New York.1 The reemployment of retired public employees in public service is governed by RSSL. Specifically, under RSSL Article 7, §212, a service retiree (a person receiving retirement benefits rather than disability retirement benefits) who is under age of 65 can be reemployed in New York public service subject to an annual $30,000 earning limitation.2 This means that a member of the BERS system who retires before the age of 65 who is not collecting a disability pension and who 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 New York City or State public sector position.3
If a retiree’s post-retirement earnings in a New York State public sector position exceeds the annual earnings limitation, the retiree’s pension benefits should be suspended unless the retiree has obtained a waiver under RSSL §211.4 If a retired employee does not comply with all applicable restrictions and collects a pension while earning in excess of $30,000 in a covered public sector job, the retiree is said to be “double-dipping.”
Audit Finding and Conclusion
Our audit found one BERS pensioner who was under age 65 and received City wages of $80,215 without having a required waiver to cover any portion of the 2014 earnings. According to RSSL §211 and §212, a service retiree who is under the age of 65 and reemployed in New York public service whose salary exceeds the income limit of $30,000 (in Calendar Year 2014) will have his or her pension benefits suspended, unless the service retiree requests that the prospective employer apply for a waiver. As a result, BERS overpaid $30,018 in pension payments to this pensioner.
When we informed BERS of the potential pension overpayments, it initiated its own investigation to determine any other additional overpayments that should be recouped. Based on BERS calculation, this pensioner is required to pay $55,747 back to BERS for overpaid pensions from Calendar Years 2013 to 2015.
Audit Recommendation
To address the non-compliance issue, we recommended that BERS officials send special reminders to its service retirees under the age of 65 and to its disability retirees to detail their responsibilities regarding compliance with public service reemployment requirements.
Agency Response
BERS officials agreed with our recommendation and had already taken steps to recoup the overpayments.
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2 RSSL §210 defines “public service” as the service of the state or any political division, including a special district, district corporation, school district, board of cooperative educational services or county vocational education and extension board, or the service of a public benefit corporation or public authority created by or pursuant to laws of the state of New York, or service of any agency or organization which contributes as a participating employer in a retirement system or pension plan administered by the state or any of its political subdivisions.
3 Disability retirees are not subject to RSSL §211 and §212. However, the New York City Charter (§1117) prohibits a New York City Department of Education non-pedagogical disability retiree from earning more than $1,800 a year (including pension payments) in New York public service, unless the retiree’s disability pension is suspended during the time of such employment. Waivers superseding this provision may not be granted.
4 The earnings limitation does not apply after the retiree reaches the age of 65.