Audit: Milwaukee County Pension Riddled with Errors

Audit going back 62 years has found that half the pension’s calculations had an error.

An ongoing audit of Milwaukee County’s pension system that reviewed a random sample of pension calculations dating back to 1955 has found that one in two calculations had an error, which ranged from missing documentation to inconsistent interpretation of county law.

“This report is concerning, but not entirely surprising,” said Milwaukee County Executive Chris Abele. “We assumed auditors would uncover both isolated benefit errors due to individual miscalculations or varying interpretation of county ordinances, as well as widespread classes of errors that impact large groups of retirees.”

In the first phase of its audit of the county’s pensions system, which covered a time span that stretched from 1955 to March 2017, auditors Baker Tilly reviewed a random sample of pension calculations. The report found that among accidental and ordinary disability payments, approximately 88% of the sample reviewed had either a missing file, or “was lacking some form of documentation or system information needed to determine appropriateness of the benefit.”

In its review of survivor benefits, the auditor found that approximately 84% of the sample had either a missing file or was lacking some sort of documentation or system information in order to determine appropriateness of the benefit.

“The latest audit reveals an eye-popping level of mistakes,” said Milwaukee County Board Chairman Theodore Lipscomb in a statement. “Yes, pension administration is complicated, but here we’re basically talking about doing math correctly.”

However, while Amy Pechacek, the interim director of retirement plan services for the county, acknowledged the myriad mistakes in a letter to plan participants, she indicated that the audit’s report wasn’t as bad as it sounded.

“The first phase of the audit confirmed our belief that there is more work to be done to guarantee that retirees are being paid correctly,” Pechacek wrote. “While there were a significant amount of issues uncovered, the good news is that for the vast majority of the errors found, the confirmed variances are small, spanning just a few dollars per month over or under an individual’s correct calculation.”

The county hired Baker Tilly in April to conduct the audit, which reportedly cost as much as $645,000. There are two more phases of the audit still to be completed, which will be released at dates that have yet to be determined. 

“Fortunately for our retirees, the vast majority of the errors discovered so far will have a very small impact on individual beneficiaries,” said Abele. ‘We will correct these errors as quickly as we responsibly can.”

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