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UFT gets bank blunder reversed quickly
Nov 12, 2009 12:06 PM
Myra Goldstein, a UFT retiree, told Channel 5 Fox news reporter Nicole Johnson that she was “flabbergasted” when her pension check disappeared electronically from her account. Goldstein said she wants to know “how it happened and why it happened.” UFT President Michael Mulgrew called for the city and state to begin an immediate investigation.
Some 53,000 UFT retirees had their monthly pension checks abruptly withdrawn from their accounts on Nov. 6, causing all sorts of distress for those counting on the money. The Bank of New York Mellon, a global financial services company that handles Teachers’ Retirement System deposits, “reversed” $189 million in October pension checks that it had put in 64,000 retirees’ accounts by direct deposit just days before.
“We’re outraged. This is unacceptable,” said UFT President Michael Mulgrew on the day the processing error occurred. “We have been on top of this since the calls first started coming in early Friday morning and we will continue to work until all of our members have been made whole. Our first priority is to get all of the money back into our members’ accounts.”
By later that day, thanks to a full-court press by the union, the city comptroller’s office and the mayor’s office, three out of four retirees had their payments restored, with a pledge by the bank that the rest would be made whole by the following Monday, Nov. 9.
As of this writing it appears the bank kept its word.
The bank also said it would be responsible for any overdraft or late fees incurred as a result of the reversal. The Bank of New York Mellon has so far convinced a number of large banks serving about half of the retirees not to charge their own fees resulting from the mistake. Many smaller institutions have so far refused to waive their own late fees.
But in a Nov. 9 letter mailed to all affected retirees, BNY Mellon promised that it would fully reimburse the retirees for any fees not otherwise canceled by the retiree’s own bank.
The bank is also offering to help members correct their scores with the credit agencies.
Not knowing initially that the bank was responsible, many retirees assumed their accounts had been hacked.
“I was in shock,” said Bill Stamatis, a retired English teacher and former UFT staffer. “I said to myself, ‘Who stole my money?’”
Stamatis had credit card bills scheduled for automatic payment the same day. When he e-mailed his own bank asking what happened, he got no reply and was in the dark until he received Mulgrew’s e-mail to all retirees later that morning explaining the situation and telling them that the union was demanding that BNY Mellon immediately return the payments.
That morning, the union was bombarded with calls from retirees saying they didn’t have money to pay their bills.
Myra Goldstein, a retired music teacher from District 8, said she was “flabbergasted at first. Now I want to know how it happened and why it happened.”
She thanked the union for being “forthright in giving out all the information as it came in.” Goldstein worried that BNY Mellon would not correct the error in time for retirees to draw money out for the weekend, a concern that turned out to be true.
“I was mortified when I got to my bank this morning to make a withdrawal and they told me I was overdrawn,” said Angela Reformato, a retired guidance counselor and past chair of the guidance chapter. “I was able to transfer money from savings, so I was all right, but what about people traveling, or those making mortgage or loan payments, or those whose credit ratings or credit card interest rates will be affected?”
The UFT is also requesting that Mellon officials meet with the TRS board to explain what happened, why, and what will be done to prevent a recurrence.
“We want to thank the mayor and all the city agencies for helping us to resolve the situation,” Mulgrew said. “We are calling on the city and state to begin an immediate investigation into how this could have happened.”
Mulgrew urged retirees whose pension funds were reversed and who incurred financial harm to be sure to keep proof. That includes receipts and/or other paperwork that detail any overdraft or bounced-check fees.
The Bank of New York Mellon has set up a toll-free hotline, 1-800-242-9100, for retirees with queries or those having problems with a credit agency due to the bank’s error. The hotline will stay open through the third week of December.
