Audit Report on the Teachers’ Retirement System of The City of New York’s Controls Over Identification of Improper Benefit Payments To Deceased Recipients

Executive Summary

The Teachers’ Retirement System of the City of New York (TRS) was established to provide pension benefits to educators who work for the New York City Department of Education, the City University of New York, and participating charter schools within the City of New York (City).

The TRS uses the Unified Pension System (UPS) to maintain active members’ and retirees’ information as well as copies of related correspondence and supporting documentation. The TRS processes monthly pension payments through the City’s Pension Payroll Management System (PPMS) and terminates benefit payments in PPMS after a benefit recipient dies.^[1] The TRS identifies a benefit recipient as deceased or potentially deceased through the following means:

• Notification directly from the decedent’s family or friends or via returned mail;
• HR-11 SSA (Social Security Administration) Death Match reports generated through the City Human Resource and Management System (CHRMS);^[2]
• Death match reports provided by two contracted vendors—Life Status 360, LLC (LS360) and Pension Benefit Information, LLC (PBI);
• Non-responsiveness to a TRS mailed request to a benefit recipient to provide a signed and notarized “Retirement Allowance Verification Form (ii),” also known as RP-68, as proof the benefit recipient is alive.^[3]

During Fiscal Years 2019 and 2020, the TRS paid $5.87 billion and $6.04 billion to approximately 90,000 and 91,000 benefit recipients, respectively.

The objective of this audit was to determine whether the TRS had adequate controls in place to detect and prevent improper benefit payments to deceased recipients.

Audit Findings and Conclusion

The TRS has adequate control procedures in place to detect and prevent improper pension benefit payments to deceased benefit recipients, provided those procedures are consistently followed. However, we found (1) the TRS did not send affidavit requests to all recipients who received annual pension income exceeding $100,000 as required; and (2) deficiencies in the TRS’ death-matching review process. In addition, we found that both PPMS and UPS contained inaccurate Dates of Birth (DOBs) for benefit recipients.

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

Audit Recommendations

To address these issues, we recommend that the TRS:

• Send affidavit requests periodically to all benefit recipients who are under 85 and receive annual pension income exceeding $100,000 from the TRS.
• Ensure that it timely suspends payments to persons whose deaths are reported to the TRS and that it follows up in accordance with its policies and procedures, including by terminating payments immediately upon receipt of a death certificate or within the applicable timeframe after it has requested and not received a signed and notarized attestation or other satisfactory proof that the payee is alive.
• Conduct a comprehensive review of the DOBs maintained in PPMS and UPS and a comparison with external records as needed to ensure PPMS and UPS contain accurate information.
• Ensure that it corrects the erroneous and inconsistent DOBs in UPS and PPMS for the members and beneficiaries identified in this report.
• Consider coordinating with the City’s four other retirement systems, as well as FISA-OPA, to centralize the death match service contracts to attain more comprehensive death match data and for potential cost savings.

Agency Response

The TRS generally agreed with the audit’s five recommendations and provided the corrective actions the agency has taken or plans to take for their implementation.

[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, and date of birth with the SSA Limited Access Death Master File.

[3] The TRS sends the “Retirement Allowance Verification Form (ii)” to benefit recipients who are: 1) living overseas; 2) under age 85 and whose annual pension income exceeded $100,000; or 3) age 85 and above.