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

Audit Report on the Pedagogical Pensioners of the New York City Teachers’ 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 pensioners who may be reemployed by a City agency and simultaneously illegally collecting a pension from the New York City Teachers Retirement System (TRS); and (2) to quantify the amount of any improper payments to such individuals who appear to have violated New York State Retirement and Social Security Law (RSSL) §211 and §212 or New York City Charter §1117 during Calendar Year 2014.

TRS provides retirement benefits to pedagogical civil service employees who were employed by the City of New York¹.The reemployment of retired public employees in public service is governed by the RSSL².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 TRS member who is not collecting a disability pension, 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 RSSL³.

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 11 TRS pensioners who violated RSSL §211-§212.  These pensioners were under the age of 65 and received a total of $379,032 in post-retirement earnings for Calendar Year 2014.  Those earnings resulted in $111,913 of pension overpayments to the 11 pensioners.  In addition, we found that instead of suspending the retirement benefits of these the pensioners it identified as receiving excess income, TRS instructed the employer to recoup excessive wages above the $30,000 threshold from those pensioners.  However, we found the recoupment of wages from three service retirees to be insufficient because TRS used incorrect wage data to determine the recoupment amount.  In each of these three cases, TRS erroneously based its calculations on the amounts paid in 2014 rather than the amounts earned in 2014, i.e., it included prior-year earnings that were paid in Calendar Year 2014 and excluded current-year earnings that were paid in 2015 when determining the recoupment amount.  As a result, the recoupment amounts were not accurately calculated.

Finally, the birthdates for 154 out of approximately 81,000 TRS pensioners whose birth dates are maintained in the City’s Pension Payroll Management System (PPMS) were different from the birth dates found in TRS’ records.  We informed TRS officials of the birth-date discrepancies.  TRS stated that the discrepancies we found occurred as a result of their transfer of old pension data from two different systems.  Upon TRS’ review of the birth-date discrepancies, TRS officials determined that the majority of them were the result of incorrect data in TRS’ database.

Audit Recommendations

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

• Investigate those individuals identified in this report; if they are in violation of State or City regulations, commence recoupment action against them.
• Send special reminders to its service retirees under the age of 65 and its disability retirees to detail their responsibilities regarding compliance with public service reemployment requirements.
• Use earned wages when: (i) determining whether a retiree is violating RSSL or NYC Charter, and (ii) calculating the recoupment amount.
• Take appropriate action, including but not limited to contacting the pensioners and requesting them to submit appropriate documentation to determine the correct birth dates of the 154 pensioners identified in this report and correct the birth dates in PPMS and/or TRS’s records.

Agency Response

TRS officials generally agreed with the recommendations in the report and provided us with information detailing the steps that they had taken and will be taking to recoup the overpayments, inform their members regarding the reemployment restrictions and correct birth-date inconsistencies.  As to the third recommendation, TRS officials stated that they used the correct earning data to calculate the recoupment of excess wages.
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