Audit  Audit of the Massachusetts State Retirement Board

The Massachusetts State Employees’ Retirement System (MSERS), one of the Commonwealth’s 104 contributory retirement systems, provides retirement, disability, survivor, and death benefits to state employees, employees of certain other public entities, and their beneficiaries. 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. In fiscal year 2019, MSRB issued more than $2.3 billion in benefit payments to more than 64,000 retirees and survivors.

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of MSRB for the period July 1, 2017 through June 30, 2019. The purpose of our audit was to determine whether MSRB ensured that members received their first pension payments within the timeframe established by Section 13(1)(b) of Chapter 32 of the General Laws.

We also followed up on issues regarding MSRB’s benefit eligibility verification procedures, identified in our previous audit (No. 2015-0088-3S), to determine what measures, if any, MSRB’s management had taken to address them. Specifically, in our prior audit, we found that because of a breakdown in communication with one of its contractors, MSRB received out-of-date information on death dates of pensioners and designated beneficiaries. This resulted in continued payments to some pensioners who had died, as well as unadjusted payments to pensioners whose payments should have increased after their beneficiaries’ deaths. During our current audit, we found that MSRB had implemented controls, including more frequent death-match analyses, to facilitate communication with external parties regarding matters affecting its operations and ensure that it had access to the most current death data.

In our prior audit, we also found that MSRB could not provide documentation that it conducted an audit of at least 5% of the Benefit Verification Forms (BVFs) it received from its members every two years as part of its benefit verification procedures. During our current audit, we found that MSRB had not taken measures to address this issue fully.

Below is a summary of our findings and recommendations, with links to each page listed.

A PDF copy of the audit of the Massachusetts State Retirement Board is available here.