We have all heard it, repeatedly, but is there really an ongoing “tidal wave” of retirements? If yes, is there evidence for it? If evidence shows there is no tidal wave, then why would a Federal agency foster such an impression?
The Federal Employees Retirement System, or FERS, started in 1984, which marked the death of the Civil Service Retirement System, or CSRS. Since then, with each passing year, there have been more and more FERS employees and fewer CSRS employees. Now that FERS is more than 20 years old, and CSRS has been a closed system for the same time, we are seeing more FERS and fewer CSRS retirements.
In their report on the RetireEZ efforts of the Office of Personnel Management (OPM), the Government Accounting Office (GAO) said:
OPM has stated that the federal employee retirement process currently does not provide prompt and complete benefit payments upon retirement, and that customer service expectations for more timely payments are increasing. The agency also reports that a greater workload is expected due to an anticipated increase in the number of retirement applications over the next decade, yet current retirement processing operations are at full capacity. Page 6, GAO letter to legislators, April 21, 2009
“Greater workload”? “Anticipated increase”? What is going on? In any event, notice the first and last sentences of this paragraph:
Full-time permanent employees on-board as of October 1, 2001 were tracked over the next three years to determine probabilities of retirement in each of the three years. In order to determine the probability of retirement, we controlled for the following variables: gender, occupation category, retirement system, and length of retirement eligibility. Controlling for these factors creates 468 subcategories each having a unique combination of the four variables. In each subcategory, the two one-year probabilities for FY 2003 through 2004 were averaged to obtain a composite one-year probability estimate. We excluded FY 2002 probabilities because retirements that year were significantly lower than we expect to see in the next several years. Page 48, “Retirement Statistics,” OPM publication issued in 2004, available from www.opm.gov.
To state in the first sentence you are going to use a set of three consecutive numbers, and then in the last sentence to exclude one number from the set because it is not in accord with your expectations, is unquestionably a form of cheating. This effort by OPM staff to support the agency position shows how much OPM wants to foster the notion of burgeoning retirements. Why? What do the statistics say?
Take a look at the nineteen years worth (FY1990 through FY2008) of retirement numbers. Notice how total retirements for FY08 were less than FY07, less than FY06, and less than FY05. For FY09, only the first two quarters are shown. They indicate the number of voluntary retirements in the first quarter of FY09 were fewer than any first quarter since FY04, while the second quarter retirements in FY09 were fewer than any second quarter since FY05.
Does the above sound to you like a “tidal wave” of retirements? I didn’t think so. But if there is no tidal wave, then why does OPM want us to believe otherwise?
In truth, there will be no “increase in the number of retirement applications” but there will definitely be a “greater workload.” The “greater workload” – which has already started – is due to a progressive shift from CSRS to FERS retirements, with the overall total remaining relatively static. Let me explain.
Some time ago, I had occasion to speak with an OPM employee who had been a benefits examiner prior to moving into management. He said that when he was an examiner, he had no problem doing 8-10 CSRS retirement cases per day, but FERS claims were different. He was able to do no more than 2-3 FERS cases in one day. Assuming he was not atypical, what accounts for the difference? Why do FERS retirement claims consume so much more time?
Mr. Reg Jones was the Assistant Director for Retirement & Insurance at OPM. He is currently retired and writes a regular column for the Federal Times. In his February 16, 2005 column, Mr. Jones said:
The formula for calculating the SRS (Special Retirement Supplement) is too
complicated for mere mortals to execute, so a simpler method has been devised.
FERS cases consume so much time because of the intensely complex, lengthy annuity supplement (AKA: Special Retirement Supplement) calculation required for most FERS retirements where the employee is under age 62. With the number of FERS retirement cases increasing each year, the number of supplement calculations is also increasing. This – not the so-called tidal wave – is the “greater workload.”
How about computer aid? FACES, or Federal Annuity Claims Expert System, is used only by OPM employees and retirement counselors at agencies who have been granted individual access to FACES. The rest of us are excluded.
Shouldn’t FACES be helpful in dealing with FERS annuity supplement calculations? Well, yes, it should. However, regarding the annuity supplement, page 28 of the FACES manual states:
Earnings may be obtained from the employee’s annual Social Security estimate.
Unfortunately, by law, earnings figures from Social Security must not be used this way. The earnings figures to be used in calculating an employee’s supplement must be either taken directly from the employee’s FERS work record, or deemed, so as not to introduce non-FERS earnings into the calculation.
Also, FACES is silent regarding average total wages, maximum yearly contributions, deeming of earnings, deduction of the lowest five years, calculation of the Primary Insurance Amount, reduction for less than full retirement age, and proration for years of FERS service. These are all mandatory, required elements in the computation of the supplement.
It appears the FACES tool cannot be used. The OPM claims staff must do the annuity supplement the old-fashioned way: manually. Quite tedious and time consuming. No wonder they can do only 2-3 cases per day, per employee!
So, more hard cases and fewer easy cases – this is OPM’s “greater workload.” This is their “tidal wave.” Their real problem is they do not have the computer tool they so desperately need to deal with this worsening situation, and they do not want to admit this. Does such a tool exist? Yes.
Check www.fedretire.us, number 8 on the menu. This computer program actually uses all the employee’s FERS earnings figures to produce an accurate calculation – not estimate – of the retiree’s FERS annuity supplement. Data entry takes fewer than three minutes. Further, the private version of the program generates a well-organized, detailed hard copy report showing all the data used; this report can easily be used for documentation and/or audit purposes.
(Incidentally, I’m told the documentation received by FERS retirees concerning their annuity computations fails to include the numbers used in calculating the individual supplement. It is a case, apparently, of “trust me.”)
Will OPM ever have a computerized tool to bail them out of this mess? Don’t bet on it. The only existing tool that could help them suffers from a severe case of “not invented here.” In the meantime, the mythical tidal wave of retirements continues. Help!