Audit Shows Only Three Percent of Newly Retired State Employees Received Initial Benefit Payments on Time

Boston, MA – In an audit released today, State Auditor Suzanne M. Bump found that only three percent of newly retired state employees received their first payments from the Massachusetts State Retirement Board (MSRB) within required timeframes.

The audit points to the submission of inaccurate or incomplete information by retirees and state government agencies as a primary cause of the delays. In its response to the findings, the MSRB also indicated the retirement of experienced human resource and payroll personnel across state government in response to the 2015 Early Retirement Incentive Program exacerbated this problem.

“Cumbersome processes and short timelines make the task of getting new retirement payments out the door on time incredibly difficult. The Retirement Board should take steps to gather information from pending retirees sooner and be clearer when they are waiting on information necessary to process payments,” Bump said of the audit. “This audit also shows that the long-term consequences of short-sighted solutions, like the Early Retirement Incentive Program, often outweigh possible financial benefits.”

Of the 6,032 retirees whose official retirement date took place during the audit period (July 1, 2017 through June 30, 2019), only 175 received their first monthly benefit payments on time. Under Massachusetts state law, MSRB must distribute initial benefit payments within 62 days of the employee’s retirement date. The audit found the first payment took on average 115 days and as many as 907 days to reach retirees. To address this problem, Bump recommended that the agency begin sending requests for information to employing agencies sooner and improve its notifications to applicants when their payments are delayed.

Additionally, the audit showed MSRB was not verifying the accuracy of retirement benefit verification forms (BVFs), which the agency uses every two years to determine a member’s continued eligibility for pension benefits. Under state regulations, MSRB must internally review a random sample of at least five percent of BVFs received. The audit determined MSRB was not meeting this verification threshold.

The report also found that the MSRB had resolved an issue identified in a 2016 audit from Bump’s office, which found the board was sending payments to pensioners who had passed away and was underpaying pensioners whose payments should have increased after their beneficiaries’ deaths.

MSRB, which operates under the purview of the Office of the State Treasurer and Receiver General is responsible for administering the Massachusetts State Employees’ Retirement System (MSERS), one of 104 public contributory retirement systems in the Commonwealth. MSRB administers MSERS for state employees, the former Massachusetts Turnpike Authority Employees’ Retirement System, and benefits for employees of the state’s judiciary branch. In FY2019, MSRB issued more than $2.3 billion in benefit payments to more than 64,000 retirees.

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