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You Paid For It: Paying the Dead

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A new report shows the top state pension funds made hundreds of thousands of dollars in payments to the grave each year.  Pension funds providing benefits to people who are no longer alive, and they say there’s not much they can do to prevent it.

“There will always be a backlog of overpayments for various reasons, dead people being one of them,” says Dave Urbanek, Teachers’ Retirement System Spokesperson

The report showed the state’s 15 largest pension funds made more than two million dollars in payments to the dead.

Urbanek says that’s because, “The last thing that’s on a family’s mind when a loved one dies is to notify TRS to tell them to stop the benefit.”

Authors of the report said technology including direct deposits have opened a door for more fraud.

“A lot of people can have access to the account whether it’s the children of the dead annuitants and things like that.” says Patrick Rehkamp of the Better Government Association.  “And sometimes they were cashing the check.”

All of the pension funds hire private companies to scour public records for death notices.   However, during the investigation, the Better Government Association found some systems paid little attention to the problem.  Rehkamp says that, “… when we asked for data from Cook County’s pension system for example, they couldn’t provide us anything, they couldn’t tell us how many death overpayments had gone out the door.  How much money it is. They had no records at all.”

The two largest pension funds reported making almost 700-thousand in overpayments over four years.  But that’s less than 0.005%  of their total payouts during that time.  While the Municipal Employees Fund said it sometimes chooses not to pursue overpayments because of cost, the teachers retirement system said it’s bound by law to recoup every dollar.   Urbanek says that, “If it’s two dollars or two hundred dollars, we go after every dime. We have to.”

Only three quarters of states actively report deaths to the social security registry…  So that means funds can easily lose track of retirees when they leave illinois.

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