La: Retired Teacher “Death Audit” Explained.

When many teachers retire, they become eligible for retirement benefits that are paid in installements for the remainder of the retiree’s life. However, as I noted in my previous post on the subject, sometimes retirement systems assume a retiree has died when the retiree is still very much alive, and sometimes, for years after the retiree dies, family members who are ineligible to receive the now-deceased retirees benefits decide to partake of those dollars anyway. Both extremes fix the focus on the retirement system’s apparent inability to efficently and correctly disburse benefits to those to whom the benefits belong and who, incidentally, remain among the living.

All of the above had me questioning how my system, the Teachers Retirement System of Louisiana (TRSL), ensures that once a recipient dies, the payout efficiently ends or, as the case may be, transitions to correctly-identified beneficiaries of the deceased.

Enter the TRSL “death audit,” an idea I was made aware of from Louisiana Federation of Teachers and School Employees (LFT) legislative and political director, Cynthia Posey, following my April 02, 2024, post.

Posey alerted me that the very topic of TRSL tracking of beneficiary deaths ad been discussed during the Louisiana Joint Legislative Committee of the Budget (JLCB) meeting on Monday, March 22, 2024.

“Death Audit” Explained

As promised in my previous post, I have transcribed the pertinent discussion.

Around 33:15 minutes in, the agenda item is FY24-25 review and approval of operating budgets for state retirement systems.

Rep. Beryl Amedee begins speaking around 37:50, and begins with her “death audit” query:

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Amedee: First of all, this is a term I hadn’t seen before. What’s a “death audit”?

Chas Nichols, La. Senate Fiscal Services Division: I’m sure they’ll be able to explain that better than I, but, it’s really intriguing. It’s fascinating.

Amedee: Well, um, my questions, whenever we get to it, would be: What is a “death audit”? Um, is it done on a regular basis, or is this something we do periodically, and why does it cost so much?

Nichols: So, I’ll, I’ll let you guys explain it [turning to two other officials seated at the table] because you were the ones that explained it to me, but, in, in an overall, it, it may, the cost may be there, but the alternative is having folks that are deceased still drawing retirement in some form or fashion, which probably [would] cost us a lot more. But others will go into the different mechanisms.

Amedee: So, are they, are their names only removed from the system after an audit? Is there not a simpler process?

Katherine Whitney: We can address that now if you like. I’m Katherine Whitney. I’m the director of the Teachers Retirement System of Louisiana (TRSL). [Turns to left] This is, I’ll let Jeff introduce himself because he may be answering some of these questions, as well.

Jeff LaCour: Jeff LaCour, assistant director of TRSL.

Amedee: Good morning.

Whitney: So, the death audit increase: So, as Chas said, it’s important that when members die, we are aware of that immediately. So that, there are multiple, it’s called “audit,” but there are multiple service providers, um, that provide services to us such that we can reconcile and check on a very regular basis [turns to LaCour] is it, is it, we run those weekly [LaCour nods] and it’s two different services?

LaCour: Some are weekly, and some are monthly.

Whitney: Right. Different services so that when we receive that information, we will immediately stop the benefit and take actions thereafter, which include, um, reclaims from the bank, and then moving into collection if we have to. Sometimes we have beneficiaries that are going to be receiving a benefit, so we will work it out with them in the event aht we can’t stop that benefit. But it saves us a tremendous amount of money, as Chas said, in catching that right away and using the best of the best in terms of those services. And those are the, those are the market prices. The providers we use are what most retirement systems throughout the country use.

Amedee: Okay. So it seems by what you’re describing, what’s labeled here as a “death audit” is not what I’m thinking of as a periodic check of the bookkeeping.

Whitney: No, ma’am.

Amedee: It’s actually the whole process you’re using to be sure that your records and your accounts are up to date, correct?

Whitney: Yes, ma’am.

Amedee: Okay. Well, that’s good. (Amedee then moves on to another topic, investment management fees.)

***

So, TRSL does have a plan in place for regularly and systematically tracking the deaths of its recipients, and that plan consists of layers of investigation and contingency plans to recoup money by working with both financial institutions and survivors of the deceased, and that in a timely manner.

TRSL has also published a document (revised March 2023), “Death and Survivor Benefits Through TRSL,” which includes a straightforward statement about disbursement recovery following death of the beneficiary (page 4):

The TRSL document above also includes succint yet detailed information on beneficiary eligibility and benefits useful to TRSL members who may not as of yet be aware.

You might want to give it a read.

“Death and Survivor Benefits Through TRSL”

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