When the Office of Personnel Management (OPM) is unable to start paying new retirees in a timely manner, it provides a fraction of what OPM estimates will be the final determination. This fraction is called Interim Pay, or IP.
Interim pay is granted for CSRS annuities, and it is granted for FERS annuities; but there is no IP paid for the FERS annuity supplement. The annuity supplement is eventually combined into a single payment with the annuity, but not until the final determination is made, months after the retirement.
How much money are we talking about? It varies by length of FERS service, age, and career FERS earnings, but in the great majority of cases the annuity supplement is from $900 to $1,800 monthly. While waiting for the final determination, the retiree gets $0.0 for the supplement.
The disparity in treatment between annuities and the annuity supplement is an inconvenience for all those entitled to the supplement, and a real hardship for some. Over the years there have been many complaints. But OPM, claiming to be guarding against possible overpayments, has successfully resisted changing this policy. (One wonders why OPM does not similarly guard against overpayments in annuities.)
A retired fed will receive monthly payments for the balance of his life. This could easily be 20 or even 30 years. During this time, OPM always has the right of offset, which allows them to deduct any overpayments from subsequent payments.
In view of the above, why is OPM so cautious about overpaying the annuity supplement, to the point of imposing hardships on retirees? In the unlikely event of error, the agency has a long, long stream of payments from which to recoup the mistake. No money will be lost.
In the opinion of this disinterested observer (CSRS retiree), there is no reasonable, persuasive justification for denying interim pay for the annuity supplement.
OPM should re-consider their policy. This would be greatly appreciated by many thousands of retirees.
