Auditor general wants three-month cycle to check on pensioners
THE AUDITOR General's Department has recommended that payments to pensioners who fail to submit life certificates within three-month periods should be suspended.
The Administrator General's Department (AGD) now suspends payments after seven months and, in a special report, the Auditor General's Department said the system "may expose the AGD to additional risks".
"The decision to lengthen the time to produce life certificates beyond three months should be carefully reconsidered," Auditor General Pamela Monroe Ellis wrote in the Special Audit Report on the Operation of the Pension Disbursement Process.
The report was tabled in the House of Representatives on Tuesday. It was geared at assessing whether the AGD has an effective and efficient system in place to monitor the pension process.
The document found that the system at the AGD cannot automatically cease payments to pensioners who have not submitted evidence that they are alive.
It also found that the system did not prevent processing cheques for delinquent pensioners - even if there is no entry of a life certificate beyond a specified period, such as three months.
"The AGD should examine how resources are employed and consider reallocating roles and responsibilities to facilitate faster processing of life certificates," the report stated.
The auditor general said automating the system to allow for automatic suspension of payments to pensioners who have not presented their certificates after three months would enhance efficiency of the process.
"We found that of a sample of 405 pensioners with outstanding life certificates as at June 2011, 91 pensioners (22 per cent) remained active although their life certificates were outstanding for periods ranging from four to 19 months," the report said.
"Payments were made to 65 of these pensioners whose life certificates were outstanding between eight and 19 months representing improper payments totalling $5.53 million," it added.
The AGD currently pays approximately $14.6 billion annually to approximately 28,000 pensioners.
The special report stated that pension payments are susceptible to fraud and irregularities.
Among the other key findings of the audit was that the AGD did not have a proactive strategy to mitigate fraud or other risks that could occur in the pension process.
"Despite discovering a $14-million pension fraud in February 2009, documentary evidence was not presented to indicate that continued risk assessments were conducted to ensure that the controls remained relevant and effective," the report said.
It also found that the AGD did not routinely probe and follow up on uncashed pension cheques to promptly identify possible pensioners.
"The AGD record reflected that as at May 2011, there were 4,826 uncashed pension cheques with total value of $187. 2 million, dating as far back as April 2004," the report stated.