Like most people whose late spouses drew a government pension, Shirley Ann Gibson began collecting a survivor’s pension after the death of her husband, James E. Gibson, a retired Chicago cop, in 2003.
Five years later, on Dec. 3, 2008, Mrs. Gibson died.
But, to the Policemen’s Annuity and Benefit Fund of Chicago, the 67-year-old woman remained very much alive. For four and a half years after her death, fund officials kept direct-depositing her monthly pension payments — nearly $90,000 in all — into her bank account, which her daughter, Erika Gibson, had access to.
Erika Gibson’s involvement in a real estate deal led to questions about the account. That, in turn, led to a police investigation that revealed she hadn’t reported her mother’s death to the pension fund and had been stealing the money, according to court records.
Gibson, 42, of Hammond, Ind., pleaded guilty last December to felony theft. She immediately repaid a portion of the money — $10,050 — to the fund. A Cook County judge sentenced her to four years of probation and ordered her to repay another $77,712, through monthly installments, by the end of 2018.
So far, the pension fund hasn’t gotten any of that additional money.
“We have been in touch with the adult probation department to ascertain why the payments are not being made as promised,” says David R. Kugler, the police pension fund’s lawyer.
Gibson couldn’t be reached for comment. Her lawyer says he hasn’t spoken with her since negotiating her plea deal.
Every year, pension funds covering city of Chicago, Cook County and state government retirees send out thousands of payments to dead people, a Chicago Sun-Times and Better Government Association investigation has found.
The size of Illinois’ dead pensioners’ club is difficult to determine because each pension fund tracks death-related overpayments differently. Also, many pensioners get their money directly deposited into accounts that other family members can access, allowing a handful of such payments to go undetected for years.
Between the start of 2010 and the end of 2014, 11 of Illinois’ 15 major government pension funds had made $2.2 million in payments to dead people that they later became aware of and were trying to recover, the Sun-Times and BGA found by examining pension records. The payments went to more than 1,000 dead people.
Officials of the funds say the amount of money they’ve lost by sending retirement money to the grave is infinitesimal when compared with the billions they collectively distribute to hundreds of thousands of people each year.
And they say that most family members quickly report pensioners’ deaths, enabling the funds to recover any overpayments. Payments that can’t be recovered often total no more than a few thousand dollars.
The largest posthumous pension payment — $203,294 — went to a retired city of Chicago truck driver named William A. Galvin Jr. He died on Oct. 5, 2004 — but his pension checks kept coming via direct deposit to his bank account for six more years before officials discovered he’d died, records show.
Galvin’s bank returned $95,633 of the erroneous payments. The Municipal Employees’ Annuity and Benefit Fund of Chicago is now suing two of his sons for the remaining $107,661. It’s also seeking repayment of another $54,617 in “federal tax withholding and health insurance premiums and subsidies.”
Two other pension funds — the State Universities Retirement System and the Teachers’ Retirement System of Illinois — had $1.5 million in yet-to-be recovered pension payments in the five-year period, including payments not only to deceased people but also to people moving off the funds’ disability rolls.
TRS doesn’t distinguish by the reason for the overpayment. It just tries “to secure the repayment,” says Dave Urbanek, a spokesman for the pension fund for suburban and downstate teachers.
The remaining two pension funds refused to provide an accounting of the erroneous payments.
One was the Cook County Pension Fund. But county officials provided documents showing they began surveying 491 pensioners 92 or older to see if they’re still alive. As of late last year, those surveys resulted in two presumably deceased people having their benefits suspended, records show. Another 44 cases were under investigation, and 111 pensioners had only recently been contacted.
County pension officials also fully recovered payments they’d made to three dead pensioners found to have been getting benefits for undisclosed periods.
The steps to get back the posthumous payments preceded Cook County Board President Toni Preckwinkle’s pushing through a 1-percentage-point sales-tax increase — an increase aimed largely at bolstering the county’s perilously underfunded pension system.
Mayor Rahm Emanuel similarly has proposed a $500 million property-tax increase mostly to help protect Chicago’s police and fire pension funds from potential insolvency. And virtually every large government pension fund in Illinois is grappling with how to make up for years of politicians skipping or making reduced payments into pension coffers, leaving them facing long-term funding shortfalls.
To determine that a pensioner has died, the pension funds rely first on family members to tell them. In some cases, death information also gets passed along by health insurers.
As a backup, most of the pension funds also pay data companies between $2,400 and $8,200 a year to run their pension rosters against the Social Security Administration’s “Death Master File” on a weekly, monthly or yearly basis. The Social Security records aren’t always reliable, though.
In Illinois, funeral directors are required to enter each person for whom they handle services into a database that sends the information to Social Security and the Illinois Department of Public Health. But Illinois is among only three-quarters of states that participate in Social Security’s “electronic death registration” program.
And not all deaths are handled by funeral directors, leaving it to county medical examiners or coroners and, in some cases, city clerks to pass along information regarding the death of a pensioner.
“We’re frustrated about having to cobble together death information,” says Charles Burbridge, executive director of the Chicago Teachers’ Pension Fund. “We get some information through Social Security. We get some information through our health-care system. But we are kind of playing catch-up. . . . There is not a direct route for us to get information.”
“We make every reasonable effort to collect,” says John Krupa, a spokesman for the Illinois Municipal Retirement Fund. “We request return of overpayments from banks. If there is a death benefit payable, we’ll deduct the funds from that.”
Still, Krupa says, “There isn’t a hard-and-fast threshold for not pursuing collection. Each situation is handled on a case-by-case basis. If we exhaust all our in-house avenues, are we going to hire a lawyer to pursue a $1,000 overpayment made to a California annuitant? No, we aren’t going to do that.”
Even when pension funds know about a death, mistakes can happen.
For instance, consider what happened with James O. Dunn, who was entitled to a survivor’s pension after his wife, a retired Chicago Public Schools employee, died in 2009.
Court records show Dunn, who was disabled, never applied for the pension until after his daughter, Rita, was named his legal guardian. She applied for the pension on his behalf on July 8, 2010 — four days before he died.
The Teachers’ Pension Fund received notification of the death and paid Dunn’s estate the survivor’s pension he was owed for the time he was alive between Oct. 1, 2009 — after his wife had died — and July 12, 2010 — the date of his death.
The fund then kept on paying Dunn’s estate as if he were still alive, records show. Between May 1, 2011, and Aug. 31, 2012, “the fund paid, and [Rita Dunn] accepted monthly survivor’s pension checks to ‘James Dunn Estate ? Rita Dunn’ in the total gross amount of $35,427.44,” according to a lawsuit the pension fund filed in May seeking repayment of the money.
The pension fund has been unable to find Rita Dunn to serve her with the lawsuit. Attempts by the Sun-Times and BGA to reach her also were unsuccessful.
When the pension fund notified Dunn of the overpayment, she replied in a letter that “it is unfortunate the pension fund made a mistake; I have no way to repay the money. . . . I was not aware of amounts/procedures. I did as I was instructed by CPS staff. . . . This is an extremely unfortunate situation.”