Massachusetts State Retirement Board

This is a state performance audit of the Massachusetts State Retirement Board, which runs the state employee retirement system.

“MSERS is administered by the Massachusetts State Retirement Board (MSRB) and operates under the purview of the Office of the State Treasurer and Receiver General (OST).”

Auditors checked whether the board followed the rules when paying pensions, spending administrative money, and running its operations.

“This audit was undertaken to determine whether MSRB provided pension benefits, incurred administrative expenses, and conducted its activities in compliance with applicable laws, regulations, policies, and procedures.”

The board handles very large public pension payments for tens of thousands of retirees and survivors, so errors can affect public money and people’s benefits.

“In fiscal year 2014, MSRB issued more than $1.8 billion in benefit payments to more than 57,000 retirees and survivors.”

If you are a state retiree, survivor, taxpayer, or future beneficiary, this matters because the audit looked at whether pension payments were accurate and protected from avoidable mistakes.

“MSERS is a contributory defined-benefit retirement system, governed by Chapter 32 of the General Laws, that provides retirement, disability, survivor, and death benefits to members and their beneficiaries.”

The main problem was not that benefits were unauthorized overall, but that the board did not always have current information needed to pay the right person the right amount at the right time.

“The Massachusetts State Retirement Board (MSRB) did not ensure that it had the most current information regarding MSRB pensioners and designated beneficiaries who had died.”

Auditors recommended better communication with outside data providers, more reliable death checks, documented reviews of verification forms, and an updated internal control plan.

“MSRB should develop and implement controls that facilitate communication with external parties regarding matters affecting its operations and ensure that it stays informed of new or changed regulations concerning access to SSA death data.”

The audit showed real money was affected, but it also reported that the board recovered most improper payments, repaid underpaid pensioners, and began strengthening controls after the audit.

“As of March 22, 2016, it had recovered approximately $608,785 (net) of the erroneous payments identified in this audit and had fully paid $271,302 of reimbursements to pensioners who had been underpaid.”

A Benefit Verification Form is the paperwork retirees use to confirm they are still eligible for benefits; the Death Master File is used to check whether benefit recipients have died; an internal control plan is the agency’s written system for managing risks and reporting problems.

“The BVF must be signed by the benefit recipient and notarized.”