Death Verification Data, Cybersecurity, and Public Pensions
State and local governmental retirement plans pay pension, survivor, and other post-employment benefits to millions of retirees and beneficiaries throughout the 50 states, the District of Columbia, and the territories. In order to administer these programs in the most accurate manner, governmental plans need access to the most complete sources of death verification data.
By: Tony Roda, Williams & Jensen
State and local governmental retirement plans pay pension, survivor, and other post-employment benefits to millions of retirees and beneficiaries throughout the 50 states, the District of Columbia, and the territories. In order to administer these programs in the most accurate manner, governmental plans need access to the most complete sources of death verification data. When payments are made to deceased individuals due to a lack of timely information, administrative burdens and costs are imposed not only on state and local governments as they seek to recoup the improper payments, but also on the federal government as it must unravel complicated tax situations created by income taxes withheld on the improper payments.
Significant data breaches occurred in the spring of 2023 that were related to private sector vendors of death verification information. Some of the breaches impacted state and local governmental retirement systems. In the aftermath, public plans began internal reviews of their cyber defenses and external investigations into alternative sources of death verification data. As part of the external investigation, NCPERS met with senior staff of the House and Senate Subcommittees on Social Security to explore options at the Social Security Administration (SSA) and other non-private sector sources.
The SSA provides two versions of death data to be shared with external organizations, as authorized by law: the public Death Master File, which does not contain data from the states, and the public plus state file, also known as the “full file,” which contains state information. Experts in the field claim that the public file covers only 19 percent of deaths, while the full-file covers 95 percent.
The full-file may be shared as authorized under Section 205(r) of the Social Security Act, which allows SSA to enter into agreements with, among other entities, qualifying federal and state agencies. This includes state agencies administering programs wholly funded by the state. In 2012 in an exchange of communications between the SSA and a public pension plan, the SSA took the position that public plans are not eligible for the full-file because employee contributions partially fund the plan, i.e., the plans are not wholly funded by the state.
In order for public plans to be eligible for the full-file, then, Section 205(r) would have to be amended. Our Congressional contacts made clear that both SSA and Congress would not support such an amendment. Their position is that the greater the demand placed on SSA to be a national clearinghouse of death data, the more it detracts from SSA's core mission of administering the largest benefit program in the country. In other words, legislative changes would meet serious opposition in Congress and at the SSA, which would make chances of success unlikely at least in the short term.
Likewise, by statutory law, the U.S. Treasury Department's Do-Not-Pay (DNP) service may provide access only to federally funded, state-administered programs. State and local governmental retirement systems are not federally funded and, as a consequence, we would need to change DNP's statutory authority to allow state plans to be eligible. Our discussions have led us to conclude that an amendment to expand DNP's authority would meet with resistance in Congress as well.
Our research then led us to a non-profit organization -- the National Association for Public Health Statistics and Information Systems (NAPHSIS). The vital records divisions of all 50 states, five territories, New York City, and the District of Columbia participate in NAPHSIS, but each jurisdiction has a different set of conditions on the use of their data. NAPHSIS categorizes its users, and working off the jurisdictions' various conditions, each user category has a different group of jurisdictions available to them.
NAPHSIS categorizes state and local governmental pension plans in the State/Local Benefits user category. There are 43 states, New York City, the District of Columbia, and Puerto Rico allowing users in this category access to their data. However, Hawaii, New Hampshire, New Jersey, New York, North Carolina, Texas, and Virginia currently would not permit access. NAPHSIS believes that recent developments in some of these states are promising and that additional states may soon allow access to this user category.
Please be assured that as we learn more about NAPHSIS and death data verification sources, in general, we will keep you apprised of any significant developments.
Tony Roda is a partner at the Washington, D.C. law and lobbying firm Williams & Jensen, where he specializes in legislative, regulatory, and fiduciary matters affecting state and local pension plans. He represents the National Conference on Public Employee Retirement Systems and state-wide, county, and municipal pension plans in California, Colorado, Georgia, Kentucky, Ohio, Tennessee, and Texas. Tony has an undergraduate degree in government and politics from the University of Maryland, J.D. from the Catholic University of America, and LL.M (tax law) from the Georgetown University Law Center.