‘Dry run’ to blame for $300M pension error
A "dry run" gone wrong caused an accidental deposit of almost $300 million into the accounts of retired police and firefighters, Capital has learned.
“They were doing a dry run and somebody made it real, and it dispersed a lot of checks,” said Angel Garcia of the New York City Fire Pension Fund.
The mistaken transfer was first disclosed by Comptroller Scott Stringer's office on Friday morning, in a statement that said the office was looking into the process.
The large deposit—$298,475,644, to be exact—duplicated pension payments that are made each year to retirees from what is known as the Variable Supplemental Fund.
The transfer appeared to be the result of a test program by New York City’s Financial Information Services Agency that was accidentally sent into production.
“They were testing something, and by mistake they made it go forward,” Garcia told Capital. “It's being reversed as we speak.”
According to a recorded message at the New York City Police Pension Fund, “All transactions will be reversed by the close of business today.”
Marti Adams, a spokeswoman for Mayor de Blasio, said in an email: “In coordination with the Comptroller’s office, the Administration is looking into the system and the actions that resulted in the inadvertent payments. The situation will be reversed this evening, and the city will work to prevent future errors.”
Eric Sumberg, a spokesman for the comptroller, told Capital earlier today that there would “likely be costs associated with this.”
Capital was unable to reach a FISA representative.
UPDATE: FISA subsequently issued a statement explaining the problem:
During the evening of April 30th, FISA staff was programming instructions for the automation of child support payments directly to the New York State Office of Child Support Enforcement.
In order to ensure that computer instructions are correct, FISA re-uses existing automated payment process instructions copied into a test environment. To produce test results rather than payment files, settings on those existing instructions must be changed. In one instance this change was not properly made, which resulted in the electronic submission of an erroneous payment file to Chase Bank.
Reversals of these erroneous payments will be made by tomorrow. The coding error has also been corrected, along with implementation of additional safeguards to ensure that a control failure of this nature does not occur again.