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story.lead_photo.caption Attorney General Leslie Rutledge is shown in this file photo. - Photo by Staton Breidenthal

Some retired members of the Arkansas Teacher Retirement System who received a letter asking them for personal information such as their addresses and Social Security numbers have asked whether the letter was a scam, officials for the system, the attorney general's office and an association said last week.

But the system's executive director, Clint Rhoden, said the request for information is intended to help the members by trying to reduce fraud and mistakes in the system's records.

He said he's aware that some members became concerned that the system's 7,000 letters sent out late last month might have been a fraudulent request to gain their information and affect their retirement benefits. The letters went to retired members who are at least 80 years old.

"I also understand that the design and wording of the form caused some members to question the ATRS staff's commitment to serving its long serving members," Rhoden said in a written statement. "I assure you the intent of the ATRS staff is never to offend or inconvenience the members."

But the system "is required under its fiduciary duty to make sure that member benefits are not being fraudulently diverted by a third party, who may have control of a member's account," he said.

The Teacher Retirement System is the state government's largest such agency, with more than $17 billion in investments and more than 100,000 working or retired members.

The system has 50,083 retired members and survivors who are paid average annual retirement benefits of about $23,580, Rhoden said. The system also has 74,390 working members with an average annual salary of $36,249, he said.

The system's letter, dated Aug. 27, asked each recipient to complete a benefit and address verification affidavit, have it notarized and return it as soon as possible to the system's address in Little Rock.

"Failure to complete and return the enclosed Benefit and Address Verification Affidavit by October 1, 2019, may result in the suspension of your pension," system Director of Operations Willie Kincade wrote in the letter.

Most of about a dozen calls that the Arkansas Retired Teachers Association received about the letter "were simply asking if the ATRS had sent the letter," association Executive Director Donna Morey said Thursday.

"The fear of fraudulent use of their personal information was their concern, [and] we told them the letter was from ATRS," she said.

Attorney General Leslie Rutledge's office also received a few phone calls asking whether the letter was legitimate, and "although this is a common tactic for scam artists, there was no specific letter scam," Rutledge's spokesman, Amanda Priest, said Thursday.

Rutledge has warned senior citizens statewide about the potential threat of identity theft. She encourages them to call her office to ensure requests for their information are legitimate, she said.

"Our letter was very easy to verify as legitimate since it was on ATRS letterhead, with the correct ATRS mailing address, website address, and 3 ATRS phone numbers to contact for questions and concerns," Rhoden said.

"In the future we plan to notify the AG's office ahead of time so they are aware of our benefit verification efforts and to work with the AG's office to craft the letter and form in a way that less resembles known scams," he said.

While the letters were sent to retirees who are least 80, "there was no intent to discriminate based on age or any other factor in this benefit verification process," Rhoden said in his written statement.

"We are in the process of performing a benefit verification process for ALL individuals on the ATRS benefit payroll. It is ATRS' fiduciary duty to verify that 100% of the benefits paid out by ATRS are legitimate (99.9% is not good enough)," he wrote.

"I am sorry that our attempt to protect our members' accounts caused some members to instead doubt our sincere commitment to them. I am grateful to the members that brought their concerns to ATRS staff's attention. We will incorporate their suggestions going forward to hopefully eliminate future offenses and inconvenience. Though we have heard negative comments from some members about this process, we have also received many comments of 'thanks' for protecting the system," he said.

All of the 50,083 retirees will get the system's letter, Rhoden said.

"We decided to break the 50,000 into manageable groups as to not overwhelm the staff, [and] we started in descending order by age," he said.

Thus far, the system has received more than 5,100 responses to the first batch of 7,000 letters sent in late August, Rhoden said.

After each batch of roughly 5,000 letters, "we will take a few months to analyze the results to see if we can improve on the process," he said, so "it could take years to complete this process and we hope to repeat the process every five years or so."

This is the first time that the retirement system has attempted this type of verification, said Rhoden, who started work as executive director in November.

"Last year, it was brought to my attention that our current process of learning that a member has passed away could miss individuals in certain circumstances," he said. The current process relies through the reporting of a member's death by a friend or family member, through locating an obituary notice in the newspaper, or through a record showing up in the system's monthly query of the national death certificate database, Rhoden said.

"We learned that these procedures could possibly be only 99.9% to 99.99% accurate," he said. "At 50,000 benefit payments being paid, a 99.99% rate would mean that 5 of those payments are not legitimate. At an average annual benefit of $25,000 that would mean we erroneously sent out $125,000 that year. But, what if these 5 unknown deaths occurred over 10 years ago. That would multiply out to over $1.2 million. If the process only yielded a 99.9% accuracy you multiply all those numbers by 10."

The information requested for verification -- such as Social Security numbers and mailing addresses -- is already recorded in the member's file, Rhoden said.

"The new information requested was a mobile telephone number and [an] email address, [and] we realize that all our members do not personally have these forms of communication," he said. "We are working on more economical methods of reaching out to our members if an issue with their account arises. We are making [an] effort to collect mobile phone numbers and email addresses of all 130,000 ATRS members, not just the retirees. This will allow ATRS to communicate directly with our members in a more constant and economical manner."

Rhoden said the letter asked for a signed copy of a power of attorney, which is also notarized, for incapacitated members "so that we can legally interact with the member's representative."

On the letter's warning that failure to return the verification affidavit by Oct. 1 may result in the suspension of a retired member's pension, Rhoden said, "A suspension of benefits is simply turning off payments temporarily once an issue with a member's account is discovered (e.g. repeated failure to respond to ATRS communication).

"Once the issue is resolved, all back payments since the suspension are paid to the member," Rhoden said.

Photo by Special to the Democrat-Gazette
Clint Rhoden

SundayMonday on 09/22/2019

Print Headline: Retiree-system bid to cut fraud raises fears of scam

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