WASHINGTON -- The Social Security Administration faced a deluge of inquiries from anxious retirees yesterday -- along with increased scrutiny from Capitol Hill -- after the disclosure that it had underpaid nearly a half-million people an average of $1,000 between 1978 and 1991.
Dealing with a public relations problem of undetermined dimensions, the Woodlawn agency said the insufficient payments resulted from a "computer glitch" that agency personnel discovered during a routine check. Simultaneously, federal investigators detected the problem during a separate audit, said Phil Gambino, the Social Security spokesman.
Mr. Gambino could not explain why it took 16 years to uncover the problem, which began in 1978 with a computer change. Nor could he say why its existence went undetected for three more years, after the error was fixed in 1991 by a software change.
Mr. Gambino said the agency had "pretty much identified" up to 426,000 people who were denied $478.5 million as a result of the error. They -- or their estates if they have died -- will automatically be notified and receive retroactive checks, but not interest. He did not know when the checks would be sent, but said that beneficiaries do not have to contact the agency.
An aide to Sen. Bob Packwood, the Oregon Republican who will take over the Senate Finance Committee in January, said the panel would look into the problem. One of the committee's first tasks will be the confirmation of Shirley S. Chater, the commissioner, as the first head of the newly "independent" Social Security Administration. President Clinton on Tuesday said he would nominate her to a six-year term.
Sen. Bill Cohen, the Maine Republican who will take over the Special Aging Committee, said: "This episode raises serious questions about how many other computer efforts have resulted in underpayments, and it further chips away at the public's confidence in the Social Security system." He promised hearings on the agency's management.
The problem arises as the Social Security Administration faces a host of problems, ranging from a lack of confidence on the part of many Americans that they will be able to collect retirement benefits to backlog of 1 million disability cases to a demand from the Clinton administration that it cut its staff by 5,000.
The underpayments generally involved two categories of retirees who work after they begin collecting Social Security retirement benefits. One category is people who retire early, then return to work and subsequently miss some monthly checks because they earn too much. About 305,000 of these people are due $319 million.
The second category is retirees who continue to collect Social Security checks while they work. The inspector general of the Department of Health and Human Services, which discovered this problem, estimated that about 121,000 such beneficiaries were due $159.5 million.
In both categories the benefits of retirees are recalculated based on their additional work. The computer errors involved those recalculations.
A computer message sent from Social Security headquarters to its offices across the country yesterday suggested it would take months to unravel the problem. In the case of early retirees, the agency is identifying the underpaid beneficiaries and hopes to process most of the cases within six months, said the message.
In the case of retirees who continue to work, "We do not, at this time, have information on the specific cases involved, nor when payment will be made," it added. The message urged agency personnel to "stress to callers that there is nothing that they need to do. Beneficiaries due underpayments will automatically be notified and paid."
But if someone insisted on having benefits recalculated, it said, the agency will do so.
A flood of queries from worried beneficiaries began to build yesterday. Mr. Gambino said the agency's toll-free 800 telephone number had a "heavier than usual" volume. One of the three dozen offices that take the toll-free calls reported 400 queries about the problem before 1 p.m.
The agency has no way of knowing how many callers could not get through. A reporter who tried all day was unable to get through, but additional personnel will be added to answer phones today.
At a suburban Rochester, N.Y., field office, Margaret Manns, a claims representative, said, "We've been bombarded with phone calls." Other offices reported queries, but said they had not built to a heavy volume.
An agency employee who declined to be identified moaned, "This will kill the field offices."
Ms. Chater, the commissioner, issued a statement that said she was grateful that agency employees were "instrumental in uncovering" the problem and promising to get money out. But, for the most part, she and other agency officials refused to talk to the media, leaving Mr. Gambino to explain.
"This shows the system worked," said the spokesman. "We found the problem and we are moving forward to correct it."
He also observed that the number of people who were underpaid amount to 1 percent of the 43 million recipients of benefits from the retirement trust fund.