Feds Targeted for $600M in Improper Retirement Payments

A retirement fund for federal workers improperly paid out an average of $120 million annually over the last five years, a new inspector general's report has revealed.

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.

In 2010, OPM was listed as one of 79 programs at 18 agencies where there's a risk of improper payments, including payouts to deceased retirees and their survivors. However, OPM was never designated as having a "high-error" program because the wrong disbursements were less than 2.5 percent of total disbursements, McFarland noted.

McFarland wrote that the "paramount concern" is the amount of improper payments that continue to be paid out when a recipient's death is not reported and payments continue for years.

"Each year new cases are identified which support this concern, such as an annuitant's son who continued to receive benefits until 2008, 37 years after his father’s death in 1971," McFarland wrote.

"The improper payment in this case exceeded $515,000 and was reported to OPM when the son, who fraudulently received the payments, died. The improper payment was not recovered."

McFarland said that by comparison OPM's improper payouts are lower than federal benefit programs.

The office of inspector general offered 14 recommendations, including getting timelier notice of deaths, comparing annuitants' Social Security numbers against a master file and tracking undelivered IRS 1099R forms, which report annuity payment income.