Audit takes issue with retirees’ outstanding loan balances

TRENTON – An audit of the Division of Pensions and Benefits found that the Division can do a better job of collecting outstanding loans.

The audit generally praised the Division, but found cause for concern with the practice of allowing workers who have at least three years in the pension system borrowing up to 50 percent of their pension contributions.

The problem arises when such workers retire with an outstanding loan balance. They can pay the loan in full before receiving pension benefits or continue a monthly payment schedule into retirement.

The state Auditor’s analysis found 4,919 workers who retired between July 1, 2009, and Jan. 1, 2012 with outstanding loan balances totaling $19.8 million.

In its response, the Division reported that monthly deductions are being made from workers’ retirement allowances in order to recover the monies.

On a related issue, the audit found 445 dead individuals still receiving pension benefits as of September 2009.

In one case, a person who died in November 2006 received $84,500 in pension benefits through June 2011.

The auditor investigated another 44 retirees and found $545,000 had been paid after their deaths. As of July 2011, $241,000 had been recouped, the audit found.

Among other things, the audit recommended improved communications to deal with this problem.

The Division said it would institute an accounts receivable system as well as improve communication between the unit that pay claims and the unit that handles the death matches.

 

Audit takes issue with retirees’ outstanding loan balances