Hundreds of Milwaukee County Retirees Received Wrong Pensions

March 9, 2012 ( – An error in the automated system for calculating pension checks for Milwaukee County retirees resulted in both underpayments and overpayments to retirees.

Most errors discovered by auditors were small, although a sampling of 30 cases for detailed review found two-thirds with mistakes. The Milwaukee Journal Sentinel reports nine of the 30 were overpaid a total of $31,707 and 11 retirees were underpaid a total of $33,146. The largest individual overpayment of that group was $14,800 and the biggest underpayment was $12,400.  

The county retirement system’s V-3 computer system by Vitech Inc. “cannot currently be relied upon to generate accurate pension calculations and disbursements without extensive manual review and intervention,” the audit says, according to the Journal Sentinel. Still, auditors found that final pension calculations were generally accurate, thanks to double- and triple-checking of pension amounts done by county pension staff.  

About one in 30 of the county’s 7,000 retirees had errors in the calculation of their pension payments by the V-3 system, county Auditor Jerome Heer said.   

In a finding announced separately in advance of the audit’s release, County Executive Chris Abele released another set of pension-system mistakes. He said “backdrop” lump sums payments were shorted by more than $300,000 for 61 retirees since 2009. The average amount those retirees were shortchanged was $505.   

County pension officials said they didn’t know how steep some of the underpayments were. The shortchanged retirees should get a check in a few weeks reimbursing them for the undersized backdrop payments they got when they retired. Those overpaid get future pension payments reduced, unless the retiree arranges a different method of repayment.  

The news report explained that the backdrop is a lump sum based on how much a retiree could have collected if he or she had retired when first eligible. The sums grew because they are paid compound interest on the backdrop period.  

Abele said the error in computer code to the county’s automated pension system had been missed by both internal county auditors, as well as an outside firm that conducts an annual review of the pension system. He credited Marian Ninneman, acting manager of the county Employee Retirement System, and Matt Hanchek, fiscal benefits manager for the county, for discovering the underpayments.  

They said the discrepancy was found through manual verifications of backdrop amounts. Hanchek said neither Baker Tilly, the pension fund’s external auditor, nor county auditors should have been expected to catch the computer error.