Reprinted from The Trumbull Times © Copyright 2009
December 17, 2009

By Donald Eng

Town Treasurer John Ponzio believes the town could recover as much as $350,000 or more from excess pension payments made to spouses and survivors of former town employees.

"We won't know exactly until McGladrey & Pullen, our accounting firm, completes the audit of all 300 pension accounts," Ponzio said. "So far, we are confident that at least eight and possibly as many as 12 accounts are receiving payments for which they are not eligible."

Ponzio said eight of the recipients had received letters informing them tha their payments would stop beginning in January.

"Of the initial 12, we sent letters to the eight that we are 100% certain are receiving payments to which they are not entitled," he said.

The eight accounts in question had received about $250,000 total in excess payments, he said. The other four questionable accounts received the other $100,000, he said. Town attorneys were also investigating how much of the payments already distributed could be recovered.

"Even if we can't get back all $250,000 to $350,000, at least we stop the bleeding," he said. Ponzio estimated the monthly savings from the combined eight pension accounts was about $4,500.

"Every account was different, and some of them were ongoing for longer than others, but these payments were going on for several years to accumulate $250,000 in payments," he said.

The pension fund payments came to the attention of the Pension Board several months ago when the board decided to change investment banks from UBS and Wilmington Trust to Wachovia, Ponzio said.

During the transition, Wachovia personnel discovered 12 of the town pension recipients may have been receiving payments for which they were not eligible. The reasons for the payment discrepancies included everything from the death of retired employees to simple clerical errors, he said.

"Wachovia brought it to the attention of the Pension Board at its November meeting, and the board decided to review all 300 pension accounts," Ponzio said.

Last week, McGladrey auditors confirmed eight pension accounts had problems, and the Finance Department sent out the termination letters to the recipients.

First Selectman Tim Herbst said any recovered pension payments could be used to boost the Pension Fund.

"If we can get back $250,000, it can go directly into the fund and reduce the amount that we need to use from our operational budget," he said. "With a Pension Fund obligation that's only 38% met, we can't afford to make these kinds of mistakes."