The City of Richmond’s retirement system paid out more than $550,000 to 44 deceased retirees over nine years, a new audit found. Most of the money has not been recovered.
City Auditor Riad Ali on Friday released an audit of the Richmond Retirement System, which administers the benefits and pensions of former city employees.
The new city audit found, among other issues, inadequate oversight of the retirement system, outdated operating procedures and incomplete death audit reports.
“RRS improperly paid $554,661.50 in benefits to 44 deceased retirees, with $415,660.76 unrecovered due to ineffective controls in preventing, detecting, and recovering payments to ineligible recipients,” the audit states.
The unrecovered money includes overpayments for taxes and insurance premiums paid directly to government agencies and health care providers between February 2015 and February 2024, auditors wrote.
RRS told auditors taxes and insurance premiums from previous years can’t be recovered — which leaves just over $101,000 outstanding and potentially unrecoverable.
The audit found one retiree who died in 2015 still got payments for more than seven years before the system identified them as deceased in June 2022, leading to nearly $250,000 in overpayment.
“Given the volume and age of improper payments, as well as the control weaknesses described in this report, there is an increased risk that fraud occurred,” the audit found.
RRS said in a statement Friday that the death-related overpayments were mainly due to privacy law changes that made getting death information difficult.
“Stopping a pension at death will not always occur immediately after a retiree’s death,” RSS said. “All pensions are stopped as soon as notification is received.”
In its statement, RRS said the overpayments represented 0.06% of the pensions paid during the nine-year period— and have dropped to 0.005% in the current fiscal year. (Virginia’s fiscal year runs from July 1 to June 30.)
RRS management told auditors that staff did not notify them “who had been overpaid for extended periods or whose overpayments remained uncollected.”
Management didn’t ask whether these were isolated overpayments or if similar cases were found, leading them to believe “these were the only instances.” RRS management also said the overpayments were due to “staffing issues and an outdated process.”
Auditors found the retirement system’s standard operating procedures were last updated in May 2014, and didn’t establish clear criteria on who is responsible for sending collection letters or writing off accounts as uncollectible.
“Management stated that they were either unaware of the SOP or did not realize it assigned them specific responsibilities, and as a result, they had not read it before the audit began,” the report states.
RRS reported to auditors that it is working to update its standard procedures and has made corrective actions in response to the audit. It transitioned to a new death record database in February.
Among other changes, the audit states RRS has created a new tracking system for overpayments and now holds weekly meetings on overpayments and collection efforts.
The city has shifted to the Virginia Retirement System for employees hired after the end of 2023, but many remain in the city’s old system.
RRS is overseen by a seven-member board, made up of five members appointed by City Council appointees and two picked by the mayor — including interim Chief Administrative Officer Sabrina Joy-Hogg, who was selected by former Mayor Levar Stoney.
