Audit finds California regularly sends pension checks to dead people

(The Center Square) – An audit of the California Public Employees’ Retirement System, America’s largest public pension fund, found regular payments to pensioners well after they died, so much so it’s challenging to get the money back.

Around 1,800 CalPERS pensioners die every month, according to a June memorandum from the fund’s Office of Audit Services that recently become public. CalPERS had more than $41 million in wrongful pension payments outstanding as of July 31, 2020, the audit said. It estimated CalPERS made those payments to about 22,000 dead pensioners.

The CalPERS Death and Survivor Benefits Division (DSBD) is responsible for verifying a pensioner has passed away and stopping payment. The audit found this process is done by a part-time employee that’s not given regular supervisory oversight.

“DSBD did not consistently identify deaths timely to minimize the issuance of benefit payments after death and related receivables,” the report said.

The pension relies equally on family members reporting deaths and weekly audits of death reports from a third party, the audit said.

Of the sample of 30 cases audited, the report found DSBD learned pensioners had died an average of 47 months after the date of their deaths, resulting in $2.34 million in wrongful payments that had yet to be recovered.

In one situation, the pension paid out a lump sum to survivors before it realized original payments had been wrongly paid.

CalPERS agreed with the findings of the report but “not the severity of the finding,” adding it would work to record the deaths in a more timely manner.

The wrongful payments are minuscule compared with the fund’s overall operation. CalPERS paid more than $25 billion over the time the audit was conducted.

The audit classified the finding as “high,” meaning the issue is considered an immediate concern and “could cause significant risks if not addressed as soon as possible.”

Responsible for most of California’s public employees, CalPERS is monetarily the largest pension fund in the country. Its most recent valuation was $472 billion. It’ is funded partially by pensioner contributions and taxpayer dollars in the form of government contributions.

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