OT? It was a horrendous screw-up that impacts more than 8,000 people..greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
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LINK Foul-up delays retirement checks to thousands
By Andrew LePage Sacramento Bee Staff Writer (Published Aug. 24, 1999)
State officials say they're "fit to be tied" over a record keeper's handling of an unprecedented snafu that has severely delayed retirement savings payments to nearly 1,500 former state workers or their survivors.
The record keeper, New York-based Dreyfus Retirement Services, sent out retirement account disbursement checks totaling about $1.6 million earlier this month. But after realizing it had accidentally sent many of them to the wrong people, Dreyfus and its parent, Mellon Bank, put a stop payment order on all of them.
Many of those who received and then deposited the monthly disbursements were later notified by their banks of the stop-payment order, meaning the funds weren't there. But prior to learning of that, state officials say, some of the retirement plan's recipients -- mostly retired state workers -- might have unknowingly overdrawn on their accounts and bounced checks.
"I deposited my check on Aug. 11 and when I returned a few days later from vacation I found my checking account was perilously low," said Deborah Nagano, who receives monthly disbursements of just over $2,000 from her late husband's retirement account.
Nagano, an attorney and mother of two, said she had enough left in her account to cover her bills without this month's retirement payment. But she worries about state retirees who might not have a financial cushion to tide them over, and she expressed outrage that as of Monday no one had offered an explanation as to what's going on.
Officials with the state's Department of Personnel Administration say Dreyfus told them Aug. 9 that all of the August payments mailed to plan recipients had been stopped. On Aug. 13, officials said, Dreyfus said new checks had been mailed out that day.
But as of Monday there was no indication any of the checks had arrived, and many recipients still hadn't received a letter of explanation from Dreyfus, Mellon or the state.
In addition to the missing monthly disbursements, about 6,700 other participants of the state's deferred compensation retirement plan, called the Savings Plus Program, were mailed incorrect confirmation of electronic payments -- so-called direct deposits.
Though state officials say it appears that all of these recipients got their money -- totaling just over $7 million -- via the electronic transfer, they got someone else's deposit statement.
"It was a horrendous screw-up that impacts more than 8,000 people," said Marty Morgenstern, director of the Department of Personnel Administration. "We don't believe anything like this has ever happened to our plan (the Savings Plus Program) before. It doesn't instill confidence."
In a letter to Michael F. Devine, president of Dreyfus Retirement Services, Morgenstern wrote that Mellon Bank "seriously erred in carrying out its responsibilities as the record keeper and administrator" and that "the errors committed are well beyond any we would expect of a competent plan administrator."
State officials also alleged Dreyfus failed to promptly notify retirees of what was going on.
In an interview Monday, Morgenstern said Dreyfus officials will have to prove it has identified and solved the cause of the error "if they're going to keep doing business with the state."
He noted that Dreyfus' contract as record keeper/administrator of the Savings Plus Program expires next year and that the process of choosing a successor begins this fall.
Mellon Bank spokesman Steve Dishart said Monday that "we're addressing the problem as quickly as possible and recipients (still waiting to be mailed their monthly disbursements) should receive their checks by Tuesday or Wednesday."
He said express mail service, "or whatever is fastest," will be used to rush the checks. He said Mellon is investigating why checks that were supposed to have been mailed out on Aug. 13 from the East Coast still hadn't arrived as of Monday.
So what was the root of the snafu?
Dishart said only that it stemmed from an error in the "distribution process" and that Mellon is "investigating the issue and doing everything we can to determine the source of the problem and to take measures to ensure it doesn't happen again."
Morgenstern said Mellon Bank is fully liable for any expenses that Savings Plus Program participants have experienced as a result of its stopping payment on all of the mailed retirement account disbursements. He said Mellon has put $212,500 in an escrow account to cover participants' charges for bounced checks and other expenses related to the snafu.
In addition, he said, Mellon has put $100,000 in escrow to cover any expenses the state incurs in dealing with the problem. Morgenstern said the state has four attorneys working on the issue and will dispatch an auditor today to investigate the apparent technical errors.
Both the Department of Personnel Administration and Mellon have set up information hotlines: The stat
-- G (firstname.lastname@example.org), August 24, 1999
By the way -
The new State fiscal year began July 1, 1999.
Just a coincidence?
-- G (email@example.com), August 24, 1999.
But the banking and government agencies are all compliant, this would never happen.
-- Robert A. Cook, PE (Kennesaw, GA) (firstname.lastname@example.org), August 24, 1999.
IPERS, the Iowa Public Employee Retirement System did not send ANY checks out in July to retirees. If you called, you got a message stating that the post office had messed up the mailing and they hoped to have checks out by the first week in August. The recording is off now, but I know some people still have not gotten their benefts. I called on two different occasions and was first told, they are still "updating their database" and to wait 30 days. Then I heard that "the best I can do is put you in the pile to be processed in 5 days." Sounds like they are doing everything by hand. I don't know when it will be fixed. The third time I called, I asked for a supervisor and no one ever came back to get me off of hold after waiting a few minutes. I still have not heard, but I did get my July retirement check yesterday.
-- (IPERS@alsoaproblem.com), August 24, 1999.
Robert is right...THEY WOULD NOT LET THIS HAPPEN...
Pollys, here's a tip... go outside and yell that at the top of your lungs. Yell big, yell strong...yell from now until the rolloever.
It'll do you no good. It'll give you a headache. It wont keep me from prepping but it will keep the lines down and the shelves stocked up at Costco.
There is no JAE. There are no Y2k Glitches. It's all a coincidence. Everything is just "doomers" with tinfoil caps making mountains out of... uh... mountians...
NO BIG PROBLEM...NO NEED TO READ FURTHER POLLYS.
(preppers, get out there and get your stuff done : )
Dontcha just love how the banks were able to notify customers AFTER they had already deposited the checks BEFORE the stop payment was done that the money was no longer in their accounts?
in the words of Lewis... "serious mojo"
-- Michael Taylor (email@example.com), August 24, 1999.
This is obviously another instance of the JAE. It's only going to get worse from here.
-- (firstname.lastname@example.org), August 24, 1999.
"and that "the errors committed are well beyond any we would expect of a competent plan administrator.""
But not beyond a fouled up y2k remediation.
"Dishart said only that it stemmed from an error in the "distribution process""
Only distribution process I know can do such a huge job is through computers.
""We don't believe anything like this has ever happened to our plan (the Savings Plus Program) before. It doesn't instill confidence.""
Right, because y2k never happened before, and being competent administrators that you are nothing like this could have ever happened without y2k.
"...and that Mellon is "investigating the issue and doing everything we can to determine the source of the problem and to take measures to ensure it doesn't happen again.""
You bet. The ABA's and the Kosky's are probably having a connuption right now...if this snafu ever entered in the mind of the masses as being a y2k foul-up...
But it will happen again. And again.
Keep those reports comming.
-- Chris (%$^&^@pond.com), August 24, 1999.
"Banks get it"
Well no, they don't. They've set us up for more problems like this.
I don't know if this specific problem is a JAE, it might not be.
The fiscal year connection is a good clue. There are large systems in which things happened depending upon clock and calendar events.
The pension disbursement might depend upon funds being transferred into the retirement account from a general account authorized by legislation that's tied to the Fiscal Year. In other words, some systems might not issue checks until the funds are available; until Fiscal Year 00 funds are authorized and available.
The bank, pension fund, state retirement system can earn interest until they need to actually cover the checks.
There could also be other processing problems. This is just the beginning people.
-- cory (kiyoinc@ibm.XOUT.net), August 24, 1999.
Oh come on now, it ain't all that bad. After all, the checks WERE written. I mean the printers did work, right? And they WERE mailed. No problem with the address lables, now is there? And they WERE delivered. The Postal Service in dark of night, rain, sleet, and snow, and all that right?
I mean it's not a FAILURE, it was just an example of one little thing failing. Probably non-critical, at that.
If you all had been reading and paying attention to the Polly threads recently like you should have been, you would all know that we don't need 100% compliance.
Now all you have to do is to get the message to those people who got stiffed, that the BANKING INDUSTRY IS COMPLIANT. They just have a few inexplicable problems, that nobody could have anticipated. A small percentage, really, no big problems, Y2K ready, redundant records, your money is safe, FDIC insured, trust them......
-- Lon Frank (email@example.com), August 24, 1999.
This is just what I expect to see quite a lot of -- screwups that affect a few thousand poeple for up to several weeks, causing real inconvenience for some of them. The question is, how many such screwups will it take to bring down civilization, or at least cause the Superbowl to be canceled? Will we see that many? I'd estimate it would take at least a million of this size to endanger the Superbowl.
-- Flint (firstname.lastname@example.org), August 24, 1999.