New York Times
May 2, 2014


$298 Million Mistake Gives New York City Retirees Brief Windfall

By J. DAVID GOODMAN

Across New York City, retired police officers and firefighters awoke on Thursday to a surprise: A $12,000 pension payment had appeared in their bank accounts.

Many wondered if it was a mistake, before asking an all-important follow-up: Can I spend it?

“This was erroneous,” a spokesman for the city comptroller’s office said later.

“Do NOT spend this money,” read a message from Edward D. Mullins, the president of the sergeants’ union, to retired members.

By then, news of what turned out to be a mistaken payment totaling $298,475,644 by the city agency that handles pension payouts rocketed around Facebook and other forums as retirees asked each other quizzically about the unexpected windfall.

“Me and my friend were joking that we were going to go to the casino and put it all on red,” said John Paolluci, a retired sergeant, who received about $9,300 in his account after taxes.

It was not immediately clear what effect the accidental payment — which should have been distributed at year’s end — would have on the pension’s investments. The main telephone line at the police pension office informed all callers in a robotic recording that it had been an “administrative error” and that under no circumstances should those who received the money treat it as their own.

“All transactions will be reversed by the close of business today,” the recording said.

The error was the result of testing by the city’s Financial Information Services Agency, responsible for payroll and pension systems. Those performing the tests, on an entirely unrelated electronic payment, believed they were working offline, not on the live system.

“In order to ensure that computer instructions are correct, FISA reuses existing automated payment process instructions copied into a test environment,” the agency said in a statement, adding that “additional safeguards” are now in place to prevent the same error.

More than 31,000 retired police officers and firefighters received the money, known as a variable supplemental fund payment, which is part of their negotiated pension payouts. About half of all retirees from the Fire and Police Departments are scheduled to receive payments of this type each year.

“If you could measure how many N.Y.P.D. retirees went to the Harley shop, Bass Pro Shop or any of the major casinos, versus any other day,” Mr. Paolluci said, “I believe there would be a significant surge in those numbers.”

What would the city do if, when seeking to electronically withdraw the erroneously deposited amount from a retiree’s account, it came up short?

“We’re going to cross that bridge when we get to it,” said Eric Sumberg, the comptroller’s spokesman, adding that a process is in place to deal with that possibility.