Feds Targeted for $600M in Improper Retirement Payments

“Feds Targeted for $600M in Improper Retirement Payments”

An Extremely Deceiving Headline

By Dell Hill

When Fox News first reported this story, the $600 million dollar figure jumped right off the page and slapped me up-side the head. Six hundred million is a LOT of money. But, as it turns out, that headline is extremely deceiving. The $600 million they refer to only covers the last five years! Can you just imagine what the REAL total of illegally obtained retirement benefits might be? It has to be in in the “many billions of dollars” category.

When you toss in the fact that this loss of revenue didn’t reach a numeric threshold to be reported; well, sir, we have yet another major issue to deal with inside the Beltway, and it’s a mighty expensive one.

“The inspector for the Office of Personnel Management — the department responsible for civil service employees — said in a report published last week that OPM’s Civil Service Retirement and Disability Fund is now in the process of trying to implement a recovery plan for some of the payments.

“The amount of post-death improper payments is consistently $100-$150 million annually, totaling over $601 million in the last five years. In addition, the balance due the government related to these improper post-death payments during the last five years has risen much faster (70%) than total annuity payments (19%),” wrote Inspector General Patrick E. McFarland.”

The crux of the problem seems to be the failure to report the death of legitimate benefits recipients, or the government’s failure to act on death reports and stop the monthly payments from being mailed. In one case, the son of a beneficiary kept receiving – and cashing – his deceased father’s checks, totalling $515,000, for an unbelievable 37 years after his death. And this fact was only revealed when the son died in 2008. Not one thin dime of that $515,000 is recoverable.

One other such case resulted in $1.2 million dollars in federal retirement checks being cashed AFTER the legitimate beneficiary had died.

In what appears to be an effort to soften the blow, the Inspector General said that by comparison OPM’s improper payouts are lower than federal benefit programs, which only means that the problem there is likely to be even greater!

Getting timelier notice of death, comparing annuitants’ Social Security numbers against a master file of deaths, and tracking undelivered IRS form 1099R forms, which report annuity payment income, are among the Inspector Generals’ 14 recommendations to address the problem.

We invite you to read the Inspector Generals formal report by clicking right here (.pdf file).