Back to the Future: OPM and the Federal Employee Retirement Tsunami

By • January 23, 2012 0 Comments

Imagine, if you will, working for Uncle Sam in the 1940′s. World War II is coming to an end. The troops are coming home. Federal employees who worked during the war years may be retiring or leaving government. What would an agency do to keep up with the backlog of paperwork? Computers as we know them did not exist. Paper, pencils, and clerks kept the paper moving.

So, essentially, an agency would do the same thing that the government would have done in the 1920′s or 1930′s. Hire more people. That was necessary to get the work out the door. It also isn’t a bad deal for agency employees. If your agency hired more people, chances are the supervisor and others would get promoted. More people = more important work and a higher grade and a higher salary.

The federal government is now changing again. A lot of new employees were hired in the 1960′s and 1970′s. These people are now retiring. It isn’t a surprise. OPM predicted a “retirement tsunami” back in 2006. In an open forum, featuring the  “top thinkers and doers from the federal sector’s personnel policy and program arenas” OPM announced “Taking the Leap: Innovation and Results for a New Public Service.”  The message from OPM: “new programs—and better ways of thinking—are required now to solve the (retirement) problem.”

Unfortunately, after “taking the leap,” the bottom was filled with rocks and the agency efforts crashed. Here is a short summary of what has happened and how OPM now intends to address the problem it first identified in 2006.

OPM was fortunate in some ways. The tsunami that was predicted to start in 2008 didn’t happen. It has had several more years to plan for the deluge.

OPM and Handling the Retirement Tsunami 

The retirement flood has now started.

Back in 2008, OPM announced “with great pleasure,” the introduction of the RetireEZ computer program. The OPM director at that time wrote: “This means you will receive your full annuity at the first payment, rather than after a period of reduced interim payments—eliminating a practice that has disadvantaged new retirees and been a barrier to our ability to achieve the highest level of customer service. This modernization moves Federal agencies from a labor-intensive, paper-based process to a modern, electronic system that contains all the Federal and military service records needed to compute the annuities of Federal employees.”

That sounded great. Unfortunately, the “great pleasure” announced by the OPM public relations person did not survive subsequent events.

Canceling the RetireEZ Project 

Two years, and a few million dollars later, OPM announced it was shutting down work by the contractor on “the agency’s retirement systems modernization project, after the contractor allegedly failed to deliver critical pieces of the system on time.”  OPM announced that it would have to decide the future of the RetireEZ program. The program was eventually cancelled.

The agency then announced it would proceed to upgrade the system using its own personnel. OPM announced in 2008: “The 10-year, $290 million contract was cancelled due to Hewitt’s failure to deliver a functioning retirement calculation engine in support of RetireEZ. The termination takes effect immediately. No work under the contract had been performed since OPM issued a stop-work order in May 2008. Additional elements of the overall RetireEZ program, including the process improvement element and data conversion, are unaffected by this action and progress continues to be made in both areas.”

Spring forward to 2011 and 2012. How is it going for federal employees who are retiring? Are they getting their retirement payments on time? Did the progress the agency was making pan out for federal retirees?

Apparently, it isn’t going well.

According to the current OPM director John Berry in testifying before a Congressional committee on November 15, 2011, the agency is able to complete only 3.5 retirement cases per day, per employee, and he agreed this was “unacceptable.” Mr. Berry also stated he has no business plan for fixing this problem, and the backlog is getting worse.

The Solution? Hire More People and Upgrade Technology 

So, what is the agency going to do?

It is going back to the future. In fact, a federal employee who worked on the federal retirement program 50 or more years ago may feel right at home even though retirement process is more complex and probably few if any typewriters but lots of people using paper and pens.

OPM is going to hire more people to do the work to solve the problem. In a blistering critique of OPM’s performance in this area,  one columnist wrote in December: “Nevermind that OPM has already more than doubled the size of its workforce over the past decade through the controversial practice of intragovernmental funds transfers….It’s what Washington does best: throw more money and people at a problem that simply can’t be solved that way.”

OPM now states: “It is our goal to eliminate the current backlog in 18 months so that 90 percent of retirees will receive their full annuity payments within 60 days of retirement by July 2013.”

In its new plan for fixing the problem a few years after it was identified, here is how the agency summarizes its new approach:

I. People

  • Bring “all hands on deck” to add claims production capacity immediately
  • Hire 56 new Legal Administrative Specialists (LAS)
  • Hire 20 new Customer Service Specialists (CSS)

II. Productivity and Process Improvement

  • Establish higher production standards and consider production bonuses
  • Expand work hours and effective use of overtime
  • Complete Lean/Six-Sigma review of the claims process
  • Ensure LAS have complete cases and more time to process claims

III. Partnering with Agencies

 

  • Improve accuracy and completeness of incoming claims
  • Involve Chief Human Capital Officers
  • Provide more frequent feedback to agencies on claims deficiencies

IV. Partial, Progressive Information Technology (IT) Improvements

  • Pursue long-term data flow strategy
  • Explore short-term strategy to leverage work agencies do now
  • Review and upgrade systems used by LAS

We knew the work was coming; we knew how much work it would be in order to process the paperwork; the government spent millions on a program that apparently did not work and now, about six years after the agency announced it was aware of and preparing for the paperwork deluge, the federal retirees who are waiting for months to get their retirement payments are the ones suffering the immediate brunt of this bureaucratic disaster.

© 2014 FedSmith Inc. All rights reserved. This copyrighted article may not be reproduced without express written consent of FedSmith Inc.

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About the Author (  |   )

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletter and a co-founder of two companies and several newsletters concerning federal human resources.

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