U.S. OFFICE OF 

PERSONNEL MANAGEMENT

OFFICE OF THE 

INSPECTOR GENERAL

STOPPING 

IMPROPER PAYMENTS 

TO DECEASED 

ANNUITANTS

Theodore Roosevelt 

U.S. Civil Service Commissioner

SEPTEMBER 14, 2011
Page Intentionally Left Blank
OPM OFFICE OF THE INSPECTOR GENERAL SEPTEMBER 2011

 EXECUTIVE SUMMARY

i

STOPPING

IMPROPER PAYMENTS TO DECEASED ANNUITANTS

The overarching reason for this report is to demonstrate the need to stop the flow of improper 

payments from the Federal Government’s Civil Service Retirement and Disability Fund (CSRDF) 

to deceased annuitants and survivors (annuitants), averaging $120 million annually over the 

last five years. While we are concerned with all post-death improper payments, our paramount 

concern is with the improper payments resulting when an annuitant’s death is not reported or 

detected and payments continue, sometimes for many years. 

This report gives the current status of the prior recommendations we have made in this area, but 

most importantly reemphasizes our concern that sufficient funds and resources of the U.S. Office 

of Personnel Management (OPM) be focused on this serious matter in order to bring about a full 

measure of success. Director John Berry and I agree that it is time to stop, once and for all, this 

waste of taxpayer money. 

Based on our recommendations, OPM has taken positive steps to address this issue. Regular 

meetings over the last three years between subject matter experts in OPM’s Retirement Services, 

Retirement Policy, the Office of the Chief Financial Officer, and the Office of the Inspector 

General (OIG) have led to enhancements in procedures. 

As a result of the efforts of this working group, a number of improvements have been achieved 

since the original OIG paper (July 2005), and our last paper (January 2008) with respect to the 

goal of reducing improper payments. In retrospect, however, these improvements were clearly 

only partial remedies at best. These improvements include:

•	 Death Master File Match. Retirement Services committed to performing, in addition 

to the weekly match, an annual computer match between its annuity roll and the Social 

Security Administration’s (SSA) death records. The annual match was performed in 2005, 

2009, and 2010, and is scheduled to be performed again in the Fall of 2011;

•	 Over 90 Project. OPM sampled the annuity roll population over 90 years old (Over 

90 Project) in September 2009, which at that time totaled 125,000, to confirm that the 

annuitants are still alive and appropriately receiving an annuity from the CSRDF. The 

sample consisted of 4,400 annuitants. Of this sample, six were determined to be deceased 

but were not identified during prior computer matches with SSA. In addition, as of the 

December 2010 report on this project, 144 annuitants in the sample had not responded 

to letters of inquiry from OPM and their annuities were placed in a suspended payment 

status. OPM is determining how best to proceed on these cases;
OPM OFFICE OF THE INSPECTOR GENERAL SEPTEMBER 2011

 EXECUTIVE SUMMARY

ii

•	 Internal Revenue Service (IRS) Form 1099R. These forms are mailed out annually to 

annuitants and report taxable annuity income received. As of May 2011, OPM received 

approximately 33,000 returned 1099Rs from the January 2010 mailing and Retirement 

Services is analyzing the forms to determine whether the annuitant has a new address that 

has not been reported to OPM, or is no longer living;

•	 Automated Check Reclamation System. In January 2010, OPM implemented an 

Automated Check Reclamation System to streamline the reclamation process, thereby 

saving significant time and resources. A reclamation is an action taken by the Government 

to recover improper post-death payments from financial institutions. The automated 

system ensures that all annuitants removed from the active annuity roll because of death 

are processed through OPM’s Death Data Reporting System, which automatically initiates 

a reclamation action through the U.S. Department of Treasury (Treasury);

•	 Treasury Denied Reclamations. Due to Treasury regulations and procedures, not all 

requests submitted to Treasury for reclamation of post-death payments are sent to the 

financial institutions for recovery. Financial institutions are not liable for the return 

of post-death payments made more than six years prior to the date of the request for 

reclamation. Therefore, at our suggestion, a process was implemented by OPM to reach 

out to financial institutions for reclamations denied by Treasury; and,

•	 Improving Death Reporting. To improve the timeliness of death reporting, OPM 

enhanced communications with annuitants and their family members through changes 

to mass mailings, the creation of video messages for the OPM Website, and recorded 

telephone messages activated while placed on hold by OPM Call Center representatives.

Despite these positive developments, there remains a high probability that egregious loss of 

monies from the CSRDF will continue and require strategic corrective actions. Each year new 

cases are identified which support this concern, such as an annuitant’s son who continued to 

receive benefits until 2008, 37 years after his father’s death in 1971. The improper payment in 

this case exceeded $515,000 and was reported to OPM when the son, who fraudulently received 

the payments, died. The improper payment was not recovered.

When compared to other Federal benefits programs, the improper payment rate is arguably 

low; however, the amount of post-death improper payments is consistently $100-$150 million 

annually, totaling over $601 million in the last five years. In addition, the balance due the 

Government related to these improper post-death payments during the last five years has risen 

much faster (70%) than total annuity payments (19%), and stronger steps must be implemented 

by OPM to identify and recover improper payments.
OPM OFFICE OF THE INSPECTOR GENERAL SEPTEMBER 2011

 EXECUTIVE SUMMARY

iii

The Administration and Congress have determined that the amount of improper payments 

Government-wide is unacceptable and as such, efforts must be made to identify the root causes 

of the improper payments and put in place a corrective action plan to reduce them. Even though 

the Office of Management and Budget has not placed the CSRDF in the high risk category 

because its improper payments fall below 2.5% of the fund’s total disbursements, OPM must 

pursue aggressive and effective strategies for the integrity of the CSRDF, and especially for the 

sake of the taxpayer.

 

 Patrick E. McFarland

Inspector General
Page Intentionally Left Blank
Table of Contents

Executive Summary ...................................................................................................... i

Status of Efforts to Reduce Improper Payments to 

Deceased Annuitants ...............................................................................................1

Background ..........................................................................................................................1

OIG Recommendations ....................................................................................................4

Matching with SSA’s Death Master File ....................................................................5

Sampling of Annuitants Over 90 Years Old ..............................................................6

Tracking Undeliverable IRS Form 1099Rs...............................................................7

Capitalizing on RSM Technology..................................................................................8

Establishing a Working Group to Improve Program Integrity .........................8

Recovering Funds Held in Inactive Accounts with Financial Institutions 

 which Remain Unclaimed/Escheatment of Monies to the States...................10

Conclusion ......................................................................................................................11
Acronyms

AVL Address Verification Letter

CSRDF Civil Service Retirement and Disability Fund

FEHBP Federal Employees Health Benefits Program

HCDW Health Claims Data Warehouse

IPERA Improper Payments Elimination and Recovery Act of 2010

IRS Internal Revenue Service

OCFO Office of the Chief Financial Officer

OMB Office of Management and Budget

OPM United States Office of Personnel Management

RSM Retirement Systems Modernization

SSA Social Security Administration
OPM OFFICE OF THE INSPECTOR GENERAL

1

Status of Efforts to Reduce Improper Payments to 

Deceased Annuitants

Background

Over the last few years, the subject of improper payments by Federal agencies has received 

increasing attention from elected officials. This has led to a number of executive orders, 

presidential memoranda, and laws to attempt to reduce the amount of improper payments. 

In Fiscal Year (FY) 2010, the U.S. Office of Personnel Management (OPM) 

was listed by the Office of Management and Budget (OMB) as having 

one of the 79 programs, at 18 agencies, that are susceptible to significant 

improper payments. While OMB has not designated OPM’s Civil Service 

Retirement and Disability Fund (CSRDF) as a “high-error” program (because 

improper payments are less than 2.5 percent of total disbursements), the 

CSRDF continues to incur high amounts of improper payments, consistently 

totaling between $100 and $150 million annually (an average of $120 million 

annually over the last 5 years). Additionally, the accounts receivable balance 

resulting from improper payments made to deceased annuitants and survivors 

(annuitants) has increased significantly.

At the end of FY 2006, total receivables resulting from payments to deceased annuitants totaled 

$66 million. By the end of FY 2010, the total receivables totaled $113 million, an increase of 70 

percent.

Improper 

Payments

Accounts 

Receivable 

(as of 9/30)

Improper Payments & Related Accounts Receivable

(in millions)

$50.0

$75.0

$100.0

$125.0

$150.0

2006 2007 2008 2009 2010

Improper 

Payments

Accounts

Receivable

(as of 9/30)

CSRDF 

improper 

payments have 

averaged 

$120 million 

annually for 

the last 5 years

$113.1

$116.8 $114.9

$98.0

$144.9

$126.2

$66.4

$115.0

$98.1

$119.8
OPM OFFICE OF THE INSPECTOR GENERAL

2

The Administration and Congress have recently taken additional steps to curb wasteful spending 

and streamline Government processes, including the Improper Payments Elimination and 

Recovery Act (IPERA), signed into law by the President on July 22, 2010. IPERA is designed to 

cut fraud, waste, and abuse by Federal Government agencies due to improper payments. 

In April 2011, OMB issued guidance to agencies on the implementation of IPERA, which 

is contained in Parts I and II of Appendix C of OMB Circular A-123. Under this guidance, 

agencies are required to perform the following for FY 2011 reporting:

1) Review all programs and activities and identify those that are susceptible to significant 

improper payments. Significant improper payments are defined as gross annual improper 

payments in the program exceeding (1) both 2.5 percent of program outlays and $10 million 

of all program payments made during the fiscal year or (2) $100 million (regardless of the 

improper payment percentage). The CSRDF meets the criteria for significant improper 

payments, with such payments exceeding $100 million annually.

2) Obtain a statistically valid estimate of the annual amount of improper payments. 

•

All programs and activities susceptible to improper payments will ensure that their 

sampling methodologies are approved by OMB prior to conducting their sampling 

measurement. 

•In addition, agencies should incorporate refinements to their improper payment 

rate methodologies based on recommendations from auditors (such as their agency 

Inspector General, the Government Accountability Office, or private auditors).

3) Implement a plan to reduce improper payments. 

• Agencies shall identify the reasons their programs are at risk of improper payments and 

put in place a corrective action plan to reduce them. 

• Agencies shall set reduction targets for future improper payment levels and a timeline 

within which the targets will be reached. Reduction targets must be approved by the 

Director of OMB. 

• In addition, agencies must ensure that their managers and accountable officers 

(including the agency head), programs and program officials are held accountable for 

reducing improper payments.
OPM OFFICE OF THE INSPECTOR GENERAL

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4) Reporting

• Agencies shall report in their annual Agency Financial Report and Performance and 

Accountability Report estimates of the annual amount of improper payments and 

progress in reducing them.

• For estimates greater than $10 million, agencies shall discuss the causes of the improper 

payments, actions planned or taken, and the results of the actions taken to address those 

causes. 

▫ Part of the discussion shall include the portion of improper payments attributable to 

insufficient or lack of documentation;

▫ Agencies need to also address the amount of actual improper payments the agency 

expects to recover and how it will go about recovering them;

▫ Agencies must include a statement on internal controls; and,

▫ Agencies must include a description of the steps to hold managers accountable. 

Managers should be accountable through annual performance appraisal criteria for 

meeting applicable reduction targets and establishing and maintaining sufficient 

internal controls to prevent improper payments from occurring, and if they occur, to 

promptly detect and recover them.

Another component of IPERA is the use of payment recapture audits, a process of identifying 

and recovering improper payments. OMB Memorandum M-11-04, issued November 2010, 

provides agencies with instructions on intensifying and expanding payment recapture audit 

reviews. Agencies were required to submit to OMB their payment recapture audit plan 

by January 14, 2011. With respect to the CSRDF, OPM has controls in place that serve as 

payment recapture audits, such as its weekly consolidated death match with the Social Security 

Administration (SSA). This activity, along with the Death Master File match and the Over 90

Project that we recommended, meets the criteria for the payment recapture audits as they are a 

detective control and a corrective control activity designed to identify and recapture improper 

payments, and is an OPM management function and responsibility.

What OPM does not have in place are annual recovery targets that 

will drive their annual performance. The targets should be based on 

the rate of recovery (amount of improper payments recovered divided 

by the amount of improper payments identified). Since the recovery 

of the improper payments is often difficult, it may therefore be very 

challenging to set a target. Per OMB, agencies shall strive to achieve 

annual recapture targets of at least 85 percent within three years (with 

2011 as the first reporting year). If an agency cannot meet this target, it must seek approval from 

OMB before setting a lower recapture target. For FY 2010, OPM recovered only 46 percent of 

the improper payments to deceased annuitants.

OPM lacks annual 

recovery targets 

that drive their 

annual performance
OPM OFFICE OF THE INSPECTOR GENERAL

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OIG Recommendations

In our last paper on this subject, dated January 25, 2008, we provided OPM with 14 

recommendations related to improper annuity payments to deceased annuitants. In the last three 

years, our office participated in a working group with staff from OPM’s Retirement Services, 

Retirement Policy, and the Office of the Chief Financial Officer (OCFO) in an effort to identify 

ways to minimize improper payments.

We are encouraged by the cooperation demonstrated by these program offices and feel that with 

the added support of OPM management, they have carried out substantial work to address many 

of these recommendations. In addition, the implementation of programmatic changes suggested 

by these recommendations has brought about a newfound commitment to more aggressively 

detect and stop payments to deceased annuitants.

During ongoing meetings, staff representatives from the OIG and the affected program offices 

have carefully reviewed the 14 recommendations to clarify their understanding of the intent 

and discuss the feasibility of accomplishing tasks required to implement each recommendation. 

These meetings have been a very positive learning experience for all involved. With the direct 

contact between the working group members, it became easy to obtain immediate feedback and 

set goals through mutual discussion and agreement. Many of the annuity roll processes proved to 

be complicated. Group members, while knowledgeable in specific areas, often lacked a complete 

overview of the various processes used in the identification and tracking of deceased annuitant 

debt, detection tools such as computer matching, and the reclamation/collection of post-death 

annuity payments. As a result, the learning process derived from the group meetings allowed the 

participants to obtain the broader understanding of the processes and systems required to meet 

the goals of the recommendations and understand the need to improve on existing practices. 

To date, significant actions have been taken by Retirement Services 

and the OCFO on 10 of the 14 recommendations. The program 

offices have demonstrated to the OIG that specific steps, such as the 

strengthening of computer programs designed to detect potential fraud 

and facilitate the collection of debt, improvements in communicating 

with the annuitant population and their family members, and “overseas 

proof of life exercises,” indicate that sufficient progress has been made 

to close the recommendations. 

 

The following is a summary of the open and closed recommendations that the working group has 

discussed:

OPEN RECOMMENDATIONS

• Original Recommendation #1 - Tracking Undeliverable IRS Form 1099Rs 

• New Recommendation #1 - Capitalizing on Retirement Systems Modernazation 

Technology

OPM Working group 

has closed 

10 of the 14 

OIG 

recommendations
OPM OFFICE OF THE INSPECTOR GENERAL

5

• New Recommendation #4 - Establishing a Working Group to Improve Program 

Integrity 

• New Recommendation #8 - Recovering Funds Held in Inactive Accounts with Financial 

Institutions which Remain Unclaimed/Escheatment of Monies to the States 

CLOSED RECOMMENDATIONS

• Original Recommendation #2 - Reconciliation of Issued Form 1099Rs to Total Payments 

• Original Recommendation #3 - Matching with the SSA’s Death Master File 

• Original Recommendation #4 - Matching of Annuitants’ Social Security Numbers with SSA 

Files 

• Original Recommendation #5 - Validating Changes to the Annuitants’ Personal 

Information 

• Original Recommendation #6 - Conducting Overseas Proof-of-Life Exercises

• New Recommendation #2 - Sampling Annuitants Over 90 Years Old 

• New Recommendation #3 - Improving Timeliness of Notification of Death to OPM 

• New Recommendation #5 - Improving Referrals of Deceased Annuitant Fraud to the OPM

• New Recommendation #6 - Improving Untimely Reclamation of Post-Death Annuity 

Payments 

• New Recommendation #7 - Recouping Partial Reclamation of Funds Held in Deceased 

Annuitants’ Bank Accounts 

Recently, the ongoing work performed in computer matching, along with the commitment by 

Retirement Services to continue the Death Master File match on an annual basis, has prompted 

the closing of original Recommendation #3. Other key projects used to identify improper 

payments to deceased annuitants include the tracking of undeliverable IRS Form 1099Rs and 

targeting samples of the annuitant population over 90 years old on a routine basis to verify if they 

are still living.

What follows is a brief summary of the results of the Death Master File match and the Over 90

Project, as well as the status of the four remaining open recommendations.

Matching with SSA’s Death Master File 

A weekly computer match is performed comparing annuitant identifiers on active annuity rolls 

with current SSA death records. However, we also recommended in 2005 that Retirement 

Services perform an annual match against SSA’s Death Master File1

 to identify those deaths 

which may have gone undetected in prior weekly death matches. 

1. The Death Master File from SSA contains over 87 million records of reported death.
OPM OFFICE OF THE INSPECTOR GENERAL

6

Retirement Services performed the match in 2005, 2009, and 2010, and going forward has 

committed to perform the match annually. The match is scheduled to be performed again in the 

Fall of 2011; however, we have recently learned that the staff performing both the weekly match 

and the annual Death Master File match, among other duties, has been reduced from 12 to 6, 

including the loss of two subject matter experts and a supervisor. We are very concerned about 

the negative impact this will have on the effectiveness and efficiency of this valuable work, as 

well as the integrity of the results gained. These matches are critical in reducing the amount of 

improper payments and such a reduction in staff responsible for them is extremely alarming.

The inherent value of such a two-phased approach (weekly matches and the annual Death Master 

File match) is evidenced by the Death Master File matches performed in 2005 and 2009, which 

successfully identified significant numbers of unreported deaths resulting in improper annuity 

payments. These improper payments fall into one of two categories: OPM was never notified 

of the death, or the death was identified in prior death matching activities but was wrongly 

judged to be an erroneous match, with no action taken to stop 

the annuity payments. This often happened after a fraudulently 

returned OPM Address Verification Letter (AVL) indicated the 

annuitant was still alive. 

We feel the detection of 24 previously deceased annuitants from 

the match with SSA’s Death Master File performed in 2009 

clearly supports the need to continue this match annually. In 

one instance, a deceased annuitant was identified as having 

received improper payments of over $1.2 million. 

We recommend that OPM perform these matches annually and include an analysis of the results 

to determine the weaknesses in their processes that allow some deaths to go undetected for many 

years.

Sampling of Annuitants Over 90 Years Old 

Based on past experience in investigating fraudulent payments to deceased annuitants, it is clear 

that one characteristic that many share is that Retirement Services does not have any ongoing 

interactive communications with much of this population. For example, correspondence where 

the program office requests a periodic reply from the annuity recipient is relatively rare. Since 

most annuitants receive their payments via electronic funds transfer to a bank account, the only 

annual mailings from OPM are those announcing a cost of living increase, a change in deduction 

for health benefits costs, or the annual open season for health insurance. For these mailings, no 

one is specifically obligated to return anything back to OPM. Needless to say, there appear to 

be numerous annuitants who have not had contact with OPM for many years. In addition, the 

annuitants’ addresses of record are sometimes no longer valid and mail is returned to OPM.

At our request, OPM began surveying the over age 90 population of the annuity roll in 

September 2009. At that time, there were over 125,000 annuitants over the age of 90 on the 

annuity roll. In the Over 90 Project, Retirement Services reached out to a sample of 1,000 

Match with SSA’s 

Death Master File 

discovered 

improper payments 

of $1.2 million

to a deceased

 annuitant
OPM OFFICE OF THE INSPECTOR GENERAL

7

of the annuitant peopulation between ages 90 and 99, and all annuitants over the age of 100 

(approximately 3,400), and requested that an AVL be signed and returned to OPM. Unreturned 

forms were noted and a second mailing was sent requesting a response, or suspension of 

payments would occur. The project was completed in the summer of 2010 with the following 

results:

• No response to the AVL’s was received for 144 annuitants in the sample, resulting in 

suspension of their annuity payments.

• Six unreported deaths were discovered, of which three are suspected to involve fraud and 

have been referred to the OIG investigators. 

• In 866 cases, follow-up was required because the returned AVL was signed by someone 

other than the annuitant without having a Representative Payee2 on file. 

We applaud the program’s commitment to this project and see it as a step towards establishing 

more frequent interaction with the annuitant population. We believe such contact and interaction 

is critical to ensuring that OPM has correct contact information, especially addresses for 

annuitants, and OPM should continue to explore other ways to efficiently increase contacts. 

Tracking Undeliverable IRS Form 1099Rs

The IRS Form 1099R contains information on taxable annuity amounts which is mailed annually 

to each annuitant who received annuity benefits the preceding calendar year. The information 

contained on this form is also shared with the IRS as notification of a potential taxable annuity, 

along with identifiers, such as the social security number and name of the recipient. Based on 

the importance of this form, we felt that verification of delivery is a significant indicator that the 

annuitant has supplied their correct address for official OPM correspondence, and that they are 

alive and receiving mail at that address. Even if they died within the preceding calendar year, 

information supplied on the 1099R is of importance in the settlement of their estate. Therefore, 

when 1099Rs are returned as undeliverable it would indicate a breakdown in communication 

between OPM and the annuitant which needs correction, and/or the potential for an unreported 

death of an annuitant.

The recommendation to analyze all returned 1099Rs has been accepted by Retirement Services 

and the returned 1099Rs from the January 2010 mailing have been collected for further 

evaluation and processing. Although staff availability and the cost of this project have been cited 

as potential roadblocks to its completion, Retirement Services has committed to proceed with an 

analysis of these returned forms. 

2. A Representative Payee is an individual appointed to receive and manage the annuity payments in the event the 

annuitant needs assistance handling their financial affairs.
OPM OFFICE OF THE INSPECTOR GENERAL

8

While progress towards completion of this project has been slow, 

and the setting of a targeted completion date has remained vague, 

we are encouraged by the program office’s plans to determine why 

approximately 33,000 of these forms were returned in 2010. A 

similar project, conducted in 2007, proved cost effective in detecting 

unreported deaths and halting the improper annuity payments. As 

with the Death Master File match, we believe this project should be 

conducted annually.

Capitalizing on RSM Technology

While the Retirement Systems Modernization3 (RSM) effort has slowed and is being 

re-examined, we continue to believe that there are opportunities in many of the steps being 

taken in moving towards a modernized environment to insert new procedures and controls to 

reduce instances of fraud, waste, and abuse of the retirement trust fund. In addition, many 

legacy processes, such as the death matches and surveys, will certainly need to be redefined in an 

automated retirement annuity environment. 

For example, we believe OPM should actively explore the capabilities of any automated solution 

to flag records and produce management reports for anomalies or suspect activity, such as 

multiple address or bank account changes in a short time period. We also recommend that OPM 

ensure that the development process for any new procedures or comprehensive solution consider 

the impacts on current controls and procedures, such as the weekly and annual death matches, 

and make sure that they are able to continue as effectively as they are now.

Establishing a Working Group to Improve Program Integrity

We believe that one of the most important recommendations included in our previous papers, 

which is still unresolved, is the recommendation to establish a working group to improve 

program integrity. The recommendation calls for OPM to establish a group comprised of subject 

matter experts to explore risk areas and develop data mining programs to look for anomalies 

in the annuity roll that could indicate possible improper payments 

or fraud. As required by the OMB’s Circular A-123, Management’s 

Responsibility for Internal Control, OPM has the responsibility to 

design controls to protect the integrity of program data. We do not 

believe OPM can carry out this responsibility effectively unless it is 

continually reviewing and analyzing data from the active annuity roll, 

and related sources, to identify potential weaknesses, flaws, and errors 

in its operations, programs, and data.

Coincidentally, OPM is currently in the early stages for the development of a Health Claims Data 

Warehouse (HCDW), which would include health claims information for a large percentage of 

3. Retirement System Modernization is an OPM strategic initiative to automate the retirement calculations using 

modern technology to ensure annuitants are paid correctly.

OPM must 

continually review 

and analyze data 

from the 

annuity roll

Analysis

continues into 

reasons for 33,000 

IRS Form 1099Rs 

returned as 

undeliverable 

in 2010
OPM OFFICE OF THE INSPECTOR GENERAL

9

the enrollees in the Federal Employees Health Benefits Program. The purpose of the HCDW 

would be to analyze claims information in an attempt to discern ways to more effectively design 

benefit structures for health plans, to both reduce the cost of health care and to achieve healthier 

outcomes for enrollees. 

The potential benefits that can be achieved from the HCDW are clear. We believe that our 

recommendation for the Retirement Services working group is along exactly the same lines 

(using a large store of data for analysis in order to make program improvements and protect 

integrity) as the HCDW effort, but it would take much less time and money to implement. The 

annuity roll data is already in OPM’s possession. With management support and dedication to 

the project, all that needs to be done is identify the funding and the subject matter experts, and 

permit them to start sooner rather than later. This staff might need to be engaged 10 – 20 percent 

of their time initially, but could theoretically grow to a full-time job for a small number of staff. 

By virtue of such a first time permanent group arrangement, discussions of their concerns and 

ideas regarding ways to identify improper payments should reduce the amount of such payments. 

Some examples of ideas that could be explored are:

• The development of management reports which identify worker errors that result in 

improper payments. 

• The creation of reports on annuity roll transactions that identify unusual anomalies that 

indicate either profound worker error or possible internal fraud.

• The establishment of annuity roll data snapshots which can be manipulated in a data base 

to identify potential areas where the data should be questioned with respect to types of 

payment actions, address validity questions, frequent changes in payment addresses, and 

unusual annuity payment increases.

• The continuation of ongoing meetings with other benefit paying agencies to share 

knowledge and advancements in the early detection of improper payments.

• The continued validation of annuitant information with respect to correct social security 

numbers and correspondence addresses.

• The establishment of data bases which can be shared with other Government benefit 

programs that allow the communication of valid information on the status of our 

annuitant population. 

With 2.5 million annuitants and the disbursement of over $60 billion annually, there is an 

enormous amount of data in OPM’s annuity roll to be studied. This data should have certain 

characteristics, trends, and patterns, and it is OPM’s responsibility to ensure the integrity of this 

data is protected.
OPM OFFICE OF THE INSPECTOR GENERAL

10

Recovering Funds Held in Inactive Accounts with Financial Institutions which 

Remain Unclaimed/Escheatment of Monies to the States

Several years ago, proactive investigations by our criminal investigators into determining if 

annuitants were deceased or alive led to a working relationship with the local Wells Fargo Bank. 

One of our investigators assigned to that region determined that Wells Fargo was maintaining 

accounts that had been inactive for several years, with the exception of electronic funds transfer 

deposits of Federal annuity payments into the accounts. Wells Fargo was not able to verify if 

the account holders were deceased and in most cases would turn the money over to the State of 

California. As a result of our efforts, we were able to identify 

deceased OPM annuitants, recover funds from inactive accounts, 

and return over $800,000 to the CSRDF. In addition, this action 

stopped future OPM funds from being deposited into these 

inactive accounts. We subsequently recommended that OPM 

expand their working relationship with financial institutions to 

uncover inactive annuitant accounts, as well as explore ways to 

proactively recover improper payments that have been escheated 

to the States.

OPM was able to expand their working relationship with Bank of America through participation 

in a quarterly forum, including the U.S. Treasury Department (Treasury) and other financial 

institutions, discussing reclamation issues and questions. In addition, OPM sent letters to seven 

other financial institutions largely used by the annuitant population inviting representatives to 

participate in a quarterly forum. The OCFO reported that they did not receive responses to the 

additional letters. Managers committed to reducing improper payments in the programs they 

manage should think strategically to determine the next course of action instead of doing nothing 

about the setback. Therefore, we continue to recommend that OPM take aggressive actions to 

establish working relationships with more financial institutions. 

OPM should expand 

their working 

relationship with the 

banking community 

to uncover 

inactive accounts
OPM OFFICE OF THE INSPECTOR GENERAL

11

CONCLUSION

We would like to recognize that OPM has made strides over the last few years in attempting to 

reduce improper payments from the CSRDF, as well as increasing the chances of identifying 

and recovering improper payments after they have been made. The willingness of Retirement 

Services and the OCFO staff to examine procedures and explore alternatives is encouraging. In 

addition, we would like to thank OPM Director John Berry for his full support. 

Our bottom line is that OPM must establish a working group of subject matter experts to 

improve program integrity, and to be successful must devote additional funding and resources. 

We believe that innovative thinking is needed, with new ideas that can bring these efforts to 

completion. If not, hundreds of millions of dollars in improper payments will continue to be 

made, much of which will have little chance of ever being returned to the CSRDF. 
Office of the Inspector General

U.S. OFFICE OF PERSONNEL MANAGEMENT

Theodore Roosevelt Building

1900 E Street, N.W., Room 6400

Washington, DC 20415-1100

Telephone: (202) 606-1200

Fax: (202) 606-2153

Website: www.opm.gov/oig