Scams

Beware of these Retirement / PERSI Related Scams

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Seniors Beware of Grandparent Scam
June 11, 2009

Idaho Attorney General Lawrence Wasden is telling senior citizens not to wire money to callers claiming to be their grandchildren.

Wasden says he's gotten about a dozen calls from Idaho residents complaining about a so-called grandparent scam, in which a caller pretends to be a grandchild and asks for money to cover bail or another emergency.

One grandmother reported that she had wired $11,000 out of the United States, believing that her grandson was in prison under horrible conditions.

Wasden says the calls are a hoax, and generally originate in Canada. He says people should ask questions to verify a caller's identity and talk to other family members before sending money.

Source: Idaho Statesman 6/09

IRS Email Scam Making the Rounds
September 14, 2007

According to the Better Business Bureau, the latest email scam to be making the rounds claims to come from the Internal Revenue Service (IRS). The authentic looking email has two parts. The first part falsely offers to pay the taxpayer $80 for participating in an online customer satisfaction survey. The second part is a link to a Web site titled "Member Satisfaction Survey" in the body of the email. The term "members" should raise a red flag...the IRS does not have members.

According to the email, the taxpayer was randomly selected to participate in the survey, and in return will have $80 credited to their account. References to the IRS appear in the "from" and "subject" lines, and there's even a copyright statement at the bottom of the message. If the taxpayer clicks on the link, the Web page they go to displays the IRS logo.

Once the taxpayer arrives at the "member" Web page, the usual customer satisfaction questions are asked. The survey requests the taxpayer's name and phone number as well as credit card information, supposedly as a means for giving them the $80 that was promised. There is no security on this Web site; it's merely a means for capturing the taxpayer's personal information.

The IRS has many ways to communicate with taxpayers, but email isn't one of them. Plus, the IRS would NEVER ask for someone's personal identification number (PIN), passwords, or other secret access codes for credit card or bank accounts. So beware, and don't believe unsolicited emails that appear to be from a government agency. Always maintain your computer security and use virus protection software. And finally, be sure to report questionable emails to the Better Business Bureau in your area.
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PERSI Keeps Member Records Confidential
Misleading emails causing concern | March, 1 2007

PERSI members can rest assured their records are confidential. In recent weeks, a representative with the Beneficial Financial Group has contacted numerous state employees offering to answer questions about PERSI benefits and retirement in general. Beneficial Financial Group is not affiliated or associated with PERSI. State email addresses are a matter of public record and may have been obtained from the state phone directory. The email is merely a business solicitation using PERSI's name for the benefit of this company. PERSI can do nothing to stop these emails because the representative does not say he is affiliated with PERSI. If you want to prevent future emails from Beneficial Financial Group, add them to your spam filter list. Members should exercise caution whenever someone suggests a financial strategy, particularly when it involves your PERSI benefits.
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Idahoans with Medicare Hit by Phone Scam
July 21, 2006

PERSI first reported the Medicare phone scam in its First Quarter 2006 retiree newsletter. (See CMS alert below or click the link to go to the newsletter article: http://www.persi.idaho.gov/retirees/newsletter/06/index.cfm?q=1.) At least seven Idahoans have now been scammed by the $299 Ring scheme. Scammers are calling Medicare beneficiaries, saying they can provide them with a"new Medicare card with extended vision and dental coverage for a fee. Scammers are asking between $299 and $379 for these fake cards. 

IF YOU ARE CONTACTED BY SOMEONE CLAIMING TO BE WITH MEDICARE WHO OFFERS YOU A NEW MEDICARE CARD WITH ADDITIONAL COVERAGE, DO NOT GIVE THEM YOUR BANK OR CREDIT CARD INFORMATION. Contact your local law enforcement agencies or call toll-free 1-877-772-3379 to file a complaint.
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Medicare Beneficiaries Urged to be on the Lookout for Phone Scams
MEDICARE CONSUMER ALERT | March 7, 2006

The Centers for Medicare and Medicaid (CMS) warns seniors and people with disabilities to be aware of a scheme that asks Medicare beneficiaries for money and checking account information to help them enroll in a Medicare Prescription Drug Plan.

This scheme is called the "$299 Ring" because that is typically the amount of money Medicare beneficiaries are talked into withdrawing from their checking accounts to pay for a non-existent prescription drug plan. Consumers can report these cases to their local law enforcement agencies or 1-877-772-3379.

Medicare has received complaints from Indiana, Michigan, Pennsylvania, Massachusetts, New Jersey, and Georgia. Complaints have been made against a number of different companies, but authorities believe the companies are the same and are typically based outside the United States. As soon as CMS receives a complaint, it is investigated and referred to federal law enforcement agencies.

No Medicare drug plan can ask a person with Medicare for bank account or other personal information over the telephone. No beneficiary should ever provide that kind of information to a caller. They should contact their local police department if they believe someone is trying to take money or information from them illegally.

In addition, legitimate Medicare drug plans will not ask for payment over the telephone or the Internet. They must bill the beneficiary for the monthly premium. Typically, that amount is set up as an automatic withdrawal from the beneficiary's monthly Social Security check. Beneficiaries may also opt to pay the monthly premiums in other ways such as writing a check or setting up automatic payments from their checking accounts.

Contact CMS Media Affairs at (202) 690-6145 if you have any questions about this scheme.
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Warning to PERSI members: Salespeople may be misrepresenting themselves as associated with PERSI.

PERSI is NOT actively contacting state employees to "review" retirement accounts. From time to time, insurance salespeople represent themselves as associated with PERSI and/or the State of Idaho. PERSI has NOT provided permission to any individual to contact employees regarding their accounts.

You may be solicited via phone or email. The salesperson is representing themselves as "an approved vender for financial products and services for State Employees." Being a vendor with the state simply means he sent in a vendor application and paid a fee.

A sample e-mail includes statements such as:

I would like to schedule an appointment at your convenience. At this appointment we would discuss your life insurance needs and retirement planning goals. I will then provide you with a written summary that will include an estimated projection of your retirement funds and cost of living at retirement age. I will present some options for you to consider to achieve your goals.

I look forward to the opportunity of working with you. You can reach me at --- ----.

PERSI in no way endorses any insurance broker or other financial services salesperson or product. With your permission we may provide them with information regarding your PERSI account, but that is the extent of our involvement. PERSI representatives are available to talk with you if you have questions about your retirement.
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"PERSI Staff as References" Scam

Occasionally, PERSI hears from members who were contacted by insurance brokers or other salespeople who try to use PERSI or names of PERSI representatives as references. The salesperson may say something like, "I know _______ _______ really well, she's helped me with a lot of people's accounts" or "I work with PERSI all the time."

PERSI in no way endorses any insurance broker or other financial services salesperson or product. With your permission we may provide them with information regarding your PERSI account, but that is the extent of our involvement.
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Free Insurance

A retiree notified us that she had received a phone call from a person telling her that the Public Employee Retirement System was offering free insurance. The retiree said that this person knew her beneficiary was her daughter and also knew her daughter's name. An appointment was set up for the person to visit her home to review her finances and income.

The retiree was smart and called PERSI to check this out before her appointment. She didn't know if she wanted to let these people in her house. We told her that PERSI does not offer free insurance to our retirees and that it sounded like a scam to us.

The next day, the retiree called us back and said that a nice man came to the door, but she wouldn't let him talk to her. Apparently he told her he had a card from Idaho State regarding health & accident insurance, but other than that we don't really know any more about this particular situation.

In a related issue that we haven't heard about for awhile, but which pops up every now and then, companies sometimes offer to "help" you recover missing PERSI checks for a fee. You don't need a company to help you receive a payment from PERSI. If a PERSI check is missing or past due, contact us and we will gladly do what is necessary to locate or re-issue your check. And we'll do it free of charge! (Of course one way to avoid lost checks is to sign up for Direct Deposit.)

If any one contacts you regarding free PERSI insurance, or any other offering regarding PERSI, we urge you to beware. If possible, get as much information as you can - name of the company, name of the person who calls, their phone number, their address and any other information possible such as brochures or written materials - and then contact us. We will check into it. Also, be assured that we do not give out member or beneficiary information to anyone without your written consent.
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Be wary of Pension Max plans; do the calculations before deciding on the best retirement plan for you

If you're planning on retiring soon, you may be contacted by an insurance agent or financial planner who will tell you about a way to make the most of, or "maximize" your pension. What they'll tell you about is a retirement planning option called pension maximization or pension max. They can make it sound like a great idea, but be forewarned, these salespeople may be the only ones maximizing on this plan. We cannot advise you to choose one plan over the other - but we strongly recommend that you weigh your options very carefully before deciding. Consult with an independent financial advisor - one who isn't selling anything other than their advice - and get their input before you decide on your PERSI retirement option and/or a pension max plan.

Here's what's going on: When you retire you basically have two ways of taking your PERSI benefit. 1) You can have the payments last for your lifetime only, giving you a higher monthly income as long as you live, but nothing after you die for your spouse. 2) You can choose what's called a joint and survivor benefit that pays you a lower amount over both lifetimes. If you die, your spouse will continue receiving payments for the rest of their life. (PERSI calls this a contingent annuitant, or CA, instead of joint and survivor. Note: Although spouses are most commonly named as CAs, you can select anyone as your CA, it doesn't have to be your spouse.)

Under a pension max plan, you would take the higher single-life PERSI coverage for your lifetime only, and use the extra money to buy a life-insurance policy. After you die, your spouse can replace the pension by using the insurance proceeds to buy a lifetime annuity.

Here's an example: Paul is 65 and is retiring. His wife, Kathy, is 60 and does not have a pension plan. Paul wants to make sure Kathy is provided for should he die first. Of his PERSI options, only the Regular Retirement option, with no CA, offers Paul a full pension. The CA options provide for Kathy when he dies, but reduce his monthly pension.

A salesman tells the couple how they can have it all.

He tells Paul and Kathy to select the maximum PERSI pension option and then take out a $100,000 cash value life insurance policy. At Paul's death, the $100,000 insurance proceeds, if invested, will yield an annual income about the same that Kathy would receive with the Regular Retirement option. According to the salesman, Paul can pay for the premiums on his $100,000 policy from the additional income he saved by opting for the maximum retirement benefit instead of a CA option.

The planner points out the other advantages of pension maximization:

  • The beneficiary can be changed and contingent beneficiaries can be named.
  • Life insurance proceeds are income tax free.
  • The policy accumulates cash value.
  • Policy loans are available.
  • If Kathy dies first, Paul can stop paying premiums, withdraw the policy's cash value or buy paid-up insurance.

It sounds great, and the agents can give computer projections showing how great it is. But, many accountants, actuaries and financial consultants will tell you that it usually just doesn't work. The difference between the higher and lower pension amounts isn't enough to pay for insurance that will adequately cover your spouse. Other factors the salesman isn't telling you:

High Commissions - A pension max policy doesn't provide Paul an income. However, agents and their companies stand to gain a lot in commissions, policy fees, and underwriting charges from Paul's premiums. Even the proceeds may incur commissions if Kathy buys an annuity after Paul's death. The larger the policy, the higher the premiums, commissions, and costs.

Shrinking Dollars - Cash accumulations in Paul's policy may not equal the premiums he pays for many years. Moreover, if Paul lives as expected, the value of the policy benefits Kathy will receive tomorrow is less than the value of the money he pays in premiums today. Thus, the loss is double-edged. To know whether future benefits are worth today's cost, ask to see a present-value analysis.

Other Assets and Taxes - Pension max proposals typically don't consider assets and savings plans (401k's, 457's, IRAs) you have to draw from in retirement, overlook the effect of taxes, and ignore individual circumstances.

Uncertain Longevity - Kathy's life expectancy is 5 to 10 years longer than Paul's which increases her financial needs. If Paul dies at age 85, Kathy may live another 5 to 10 years. Should Paul die very early, say at 66, Kathy may be looking at 25 to 30 years in which she'll have to be financially independent. For safety, calculate for five, ten and twenty years ahead.

No Income Guarantees - There is no guarantee that Kathy can receive returns on her $100,000 insurance proceeds to ensure an adequate income for her lifetime. Because the economy is unpredictable, Kathy may find herself earning much less than she had counted on.

Interest Rates - Many pension max projections use interest rates that are too high when estimating premiums or benefits. If interest rates fall, you would have to pay higher premiums to get the same benefits. Sometimes, a couple can no longer afford the higher premiums to keep a policy in effect, losing what they've paid in as well as the future security.

Inflation - Even if Kathy secures an adequate return, inflation would erode the value of her insurance income quickly. There are no cost-of-living adjustments (COLAs) on interest income. If Paul wants the equivalent of a cost-of-living augmented pension like PERSI, he must buy a larger policy or one with an escalating death benefit. Have your agent do a present value analysis. This recognizes that $1 spent on insurance premiums today is worth more than $1 in future benefits and shows whether the policy is worth the cost. Don't buy from anyone who won't or can't do this calculation. Always get a present value analysis for insurance with COLA features or where premiums or death benefits vary. PERSI has yearly COLAs to keep up with inflation.

Unpredictable Economy - If Paul were to buy an interest sensitive policy and interest rates fall; OR if his policy has a "vanishing premium" and interest rates fall; OR if at his death investment returns on Kathy's proceeds fall, the plan may utterly fail. Ask the agent to show you what happens under each plan if interest rates decline. A PERSI survivor option, even though it pays less per month, is guaranteed, with cost of living increases for all of Paul's life and all of Kathy's life, even if she should outlive Paul by 40 years or more.

When You Choose a PERSI CA Option - What does your PERSI pension offer that an insurance policy doesn't?

  • Pays guaranteed benefits for the lifetimes of both spouses.
  • "Pop up" - If your spouse dies first, your benefit pops-up to the higher individual retirement option amount.
  • Does not base the security of your benefits on current investments.
  • Provides economic certainty and allows for future financial planning.
  • Annual cost-of-living adjustments.
  • There is no chance that a spouse's benefits will be altered.

Do your Homework - Careful evaluation is essential in making the best financial decision for you. When calculating your retirement needs include the assets needed beyond retirement, the liquidity of those assets, supplemental savings or investments, debts, health and projected longevity, insurability, and inflation. Ask yourself:

  • What are our current and future monthly income needs?
  • How much will inflation reduce our purchasing power over our lifetime?
  • Have we analyzed the financial affect of longevity, our age differences, and health?
  • Do I lessen the risk by selecting a retirement option other than the maximum benefit?
  • How much lifetime income will each alternative pay? Does each pay cost-of-living increases?

For pension max to work, two tests must be satisfied: 1) Your net lifetime pension, after paying insurance premiums, must be greater than you'd receive under a CA option; and 2) After you die, the insurance proceeds must buy your spouse a lifetime income at least equal to what your joint-and-survivor pension would pay.

With pension max you'll be shown the advantages, but you may not be shown the liabilities. It's up to you to research the facts and calculate your exact financial position under each plan. You've earned your PERSI benefit. You'll receive it as long as you live, and if you choose, so will your spouse. Beware of forfeiting this guaranteed benefit for a plan that may cost more and deliver less.
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Collection Agency

If you are contacted by a collection agency about a PERSI check that may be due to you, call us. Sometimes, although rarely, PERSI checks are lost, but you don't need a collection agency to correct the problem. They will charge you a fee. We will not. We will make sure you receive any PERSI payments due to you absolutely free.

For information, call 334-3365 or 1-800-451-8228 or e-mail our "front desk" and your question will be forwarded to the correct person. Have your Social Security number ready when you call.
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"But, this guy told me..."

Opinions, hearsay and advice from friends, insurance agents and financial planners about PERSI retirement benefits, though probably well-intentioned, may be incorrect and even costly to you. If you want accurate, up-to-date information on PERSI benefits, go to the best source of information - PERSI. Our staff is trained to answer your questions and explain your benefits to you. PERSI benefit information is available to you at any time, and is current, personalized, unbiased and free of charge.
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