The Trouble With OPM

OPM could alleviate a great deal of the suffering and complaints by paying a higher proportion of the agency estimate when a federal employee retires. The agency chooses not to do this, thus ensuring the complaints continue.

For many months, the Office of Personnel Management (OPM) has been deluged with complaints about the service they render to recently retired federal employees. John Berry, OPM Director, has been obliged to testify before committees of both the House and the Senate.

Overwhelmingly, the concerns have been about the institutional slowness of determining the correct annuity amount, and about the sharply discounted – sometimes more than 50% – interim payments while waiting for the determination. (See, for example, Back to the Future: OPM and the Federal Employee Retirement Tsunami and Berry to Congress: Annuity Processing Backlog is Bad, Will Get Worse)

OPM concedes that the annuity estimates provided to OPM by agencies are reasonably, if not perfectly, accurate. The interim payments are approximations. A high degree of accuracy is not demanded at this point. So, it would appear that OPM could alleviate a great deal of the suffering and complaints by paying a higher proportion of the agency estimate. But OPM chooses not to do this, thus ensuring the complaints continue.

A major reason for discounting the agency estimate so much is the OPM fear of what they call “improper payments.” OPM apparently considers an improper payment to be one that is larger than it should have been. But the Improper Payments Act defines improper payments as simply being incorrect, with no regard as to whether they are over or under. Because of their apparently erroneous interpretation of “improper,” OPM reduces interim payments, so as to be ultra-careful to not pay the retiree too much.

Somebody needs to tell OPM that a reduced payment is just as “improper” as an overpayment. This, in and of itself, would be helpful.

So much for the annuity: it is determined too slowly and the interim annuity payment is too small. Is there something else wrong? Yes there is.

FERS employees who retire under age 62 are also entitled to an annuity supplement, which is paid at the same time and in the same payment as the annuity itself. But it is not included in the interim payment. The interim payment excludes the supplement. Retirees get $0.0 for the supplement until months after their retirement, when the final determination takes place. Why does OPM pay nothing for the supplement, like this?

Previous excuses have been unconvincing, like “it would take additional computer programming to handle the supplement.” For an estimate? Or, “we need to wait until entitlement is established.” This one is paradoxical. How can a person be entitled to the annuity but not the annuity supplement? If you have earned one, then you have earned the other.

Recently, OPM provided their real reason for $0.0 supplement, in the interim payment. On January 18 they posted ( their “Strategic Plan for Retirement Services,” under “WHAT’S NEW AT OPM.” Below is from page 8:

Agency HR offices do not generally have the Social Security payroll amounts available needed for the supplement. As a result, OPM must obtain this information directly from the U.S. Social Security Administration (SSA).

So, that’s their reason! They are waiting to hear from Social Security.

There is one problem with this. Social Security reports military, federal civilian, private industry, and self-employment income together, in one sum for each year—all income is conflated into a single figure. But calculation of the FERS annuity supplement must, by law, use only FERS earnings. This means that the Social Security data, due to its lack of granularity, is unusable.

Bottom line: There is one action OPM could quickly and easily take, with no congressional approval or funds, no additional employees, no new regulations, etc. It could acknowledge that overpayments are no more improper than underpayments, and adjust interim payments accordingly, to 95 or even 100% of the agency estimate. This simple move would be welcomed by thousands, I’m sure. (Does everybody know what KISS means?)

About the Author

Robert Benson served 35 years in various Federal agencies, as both a management analyst and IT specialist. He is a graduate of Northwestern University.