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NPR correcting clerks’ errors in 840 retirement accounts

Originally published in Current, July 26, 2004
By Mike Janssen

NPR’s employees were reminded recently why they might want to double-check their pay stubs. The network revealed July 14 that it miscalculated payments into retirement funds for 11 years. It blames errors in manual calculations and will correct the mistakes this fall.
NPR recently reviewed 2,300 current and former employees from 1991 to 2001 and discovered that 840 had accounts that were out of whack. Of those, 390 were short on funds. In the other cases, NPR either contributed too much to the accounts or withheld too much in voluntary contributions from its employees.
The average discrepancy either way was $1,500. NPR declined to disclose the biggest error.
The network doesn’t know yet the cost of fixing its mistakes. The net outlay for corrections will depend on the value of the invested retirement funds, which will be calculated in October. The network has reserved $1.1 million to put toward investigating and correcting the discrepancies and expects to pay out more than it takes back.
Several kinds of mistakes occurred. In some cases, NPR put too much in employer contributions into employees’ retirement fund accounts. That excess money will be returned to the NPR retirement plan. In cases where NPR’s employer contributions were too low, the company will deposit the shortfall, plus investment earnings, into employees’ retirement accounts.
Some employees had too much taken from their paychecks for deposit into their voluntary withholding accounts. If these deposits exceeded IRS limits, employees will be reimbursed by their investment companies. Otherwise, the excess money can stay in their accounts.
Still others had too little taken from their paychecks for their voluntary accounts, but they already received that money as take-home pay, so no adjustments will be made.
Some employees, even net losers, shrugged at the screwup, which affected money most of them won’t see for years anyway.
“There’s not a lot you can do,” says Jon “Smokey” Baer, an associate producer for All Things Considered whose funds will lose money when the adjustment is done. “Mistakes were made and are being corrected, and that’s life.”
“It’s something that really never should have happened, and we regret that,” says Kathleen Jackson, NPR’s v.p. of human resources.
The errors occurred between 1991 and 2001, when a single clerk was charged with figuring the monthly retirement fund deposits, sometimes using only a calculator. Several people held the job during that period, often making manual data entry mistakes and at times misapplying rules of the retirement plans.
Even as retirement plan formulas became more complicated, NPR never assigned more than one person to the task. Two years ago, the network implemented an automated system that it expects will prevent such mistakes from recurring.
Jackson was the first to discover the errors when, in 1999, she noticed discrepancies in her own fund deposits. NPR’s human resources department began studying other accounts and by 2000 saw that the miscalculations were widespread.
To track down the errors, staffers pieced together years of scattered paper records and entered them in databases—work that cost tens of thousands of dollars, if not more.
NPR learned June 17 that the Internal Revenue Service approved the network’s proposed steps to fix the discrepancies. Without the tax agency’s go-ahead, NPR’s funds could have lost their tax-deferred status, which would have cost employees.
The lawyers, consultants and funding agents that NPR consulted during the review all said such errors are common, Jackson says, especially for nonprofits, which often spend less on administrative systems than for-profit companies do.

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Current
The newspaper about public TV and radio
in the United States
Current Publishing Committee, Takoma Park, Md.
Copyright 2004

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