A group of lawmakers is pressing the Office of Personnel Management director for answers about the OPM retirement backlog, but are they aware of the full picture?
A recent letter expresses concerns the lawmakers have about “excessive delays federal retirees in our states are facing as they wait to obtain their hard-earned retirement benefits.” The letter notes that it often takes well beyond OPM’s stated goal of processing federal employees’ retirement claims in 60 days.
The letter was sent by Senators Tammy Duckworth (D-IL), Dick Durbin (D-IL), Richard Blumenthal (D-CT), Amy Klobuchar (D-MN), Joe Manchin (D-WV), Jeff Merkley (D-OR), Bernie Sanders (I-VT), Mark Kelly (D-AZ) and U.S. Representatives Shontel Brown (D-OH), Annie Kuster (D-NH), Robin Kelly (D-IL) and Mark Pocan (D-WI).
The letter asks for answers to a series of questions about the backlog as well as OPM’s plans for speeding up its retirement processing times. No deadline is given by which the lawmakers want the answers.
The text of the letter is included at the end of this article.
What the OPM Retirement Backlog Means for Federal Employees
When a federal employee first submits a retirement application, he will get what is known as “interim” annuity payments until OPM finishes fully processing the retirement application. These payments represent a portion of the final annuity payment and are usually made on the first business day of each month.
The intent of interim payments is to provide federal employees with some retirement income while OPM is processing the retirement application.
Only federal income tax is withheld from interim payments. Health and life insurance coverage will continue while federal employees are receiving interim pay, and OPM will begin withholding health and life insurance premiums retroactive to the commencing date of the annuity once processing the retirement applications has been completed.
When there is a significant backlog of retirement claims at OPM, it means that it is likely to take longer to process federal employees’ retirement claims. The longer the process takes, the longer federal employees will remain in interim status on their annuity payments.
History Paints a More Dismal Picture
The lawmakers’ letter calls out the spike in the OPM retirement backlog in January 2023. It notes, “…OPM received close to twice as many retirement claims in January 2023 as it did the previous month” and then asks what the agency plans to do to handle the increased caseload.
For reference, at the end of December 2022, the OPM retirement backlog stood at 21,596. At the end of January 2023, it rose to 24,858, a 15% increase. If these lawmakers think it is bad now, they are in need of a history lesson on OPM’s retirement backlog.
First off, a 15% spike in January is really pretty modest. While January is normally the busiest month of the year in terms of incoming retirement applications because so many federal employees opt to retire at the end of a calendar year, January 2023 had the smallest increase in the total backlog since 2018.
The worst increase in the backlog in January in the last decade was January 2015. The backlog stood at 22,636 then, up from 11,669 at the end of December 2014, a 94% increase. January 2016 was also noteworthy, going from 11,399 at the end of December 2015 to 19,761, a 73% increase.
Another important point about the lawmakers’ letter is that a backlog in the low 20,000s is nothing compared to what it was in 2012. At the end of January 2012, the OPM retirement backlog was 61,108. It dropped to 26,402 to close 2012, but then by the end of February 2013, it had shot back up to 41,103.
In other words, this is not a new problem.
OPM’s Strategic Plan to Modernize Retirement Processing
Some of the questions from the letter provide a glimpse into OPM’s plans over the next few years for dealing with the slow pace of processing retirement claims. One question states, in part:
OPM’s 2022-2026 strategic vision includes an initiative to modernize the application process, including developing an electronic application form and an electronic system to store retirement information. A pilot digital retirement system, which is based on OPM’s modernization initiative, already has been rolled out. How many retirees has the pilot served so far? What is OPM’s plan to expeditiously expand the program across the agency? What is the estimated cost of implementing digitization?
Regarding modernizing the retirement processing system, OPM’s 2022-2026 strategic plan states:
GAO and independent third-party consultants have identified challenges with retirement services, including legacy contact center infrastructure and technology not equipped to handle the volume of calls and inquiries received, the need to fund and modernize legacy systems to move from paper-based applications and manual case processing to electronic systems, insufficient staff capacity, and incomplete retirement applications from agencies. (emphasis added)
So apparently, OPM has plans to “move from paper-based [retirement] applications and manual case processing to electronic systems.”
We’ve Seen This From OPM Before
Long time FedSmith readers may think this sounds familiar. If so, you are not experiencing déjà vu.
In 2012, we published an article titled Back to the Future: OPM and the Federal Employee Retirement Tsunami.
In this article, FedSmith author Ralph Smith described what he called OPM’s “back to the future” moment in which the agency developed an electronic system to modernize the agency’s retirement processing, but later cancelled the project and went back to doing the retirement applications by hand using humans, pens and paper.
These are some of the key excerpts of this article:
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.
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.”
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.”
So, will OPM fare any better in solving the retirement backlog with what sounds like a very similar approach? That remains to be seen.
Lawmakers’ Letter Regarding the OPM Retirement Backlog
April 3, 2023
Dear Director Ahuja,
We write to express our concern with the excessive delays federal retirees in our states are facing as they wait to obtain their hard-earned retirement benefits. It has been reported that average retirement processing times have been far above the agency’s stated goal of 60 days—instead often exceeding 90 days. We are aware of at least one case that has been in processing for fifteen months. We also have experienced delayed response times to congressional inquiries.
Our nation’s federal retirees are dedicated public servants who often have provided decades of essential work that is vital in keeping our government running, despite being subjected to uncertainty due to hiring freezes, continuing resolutions and other budget constraints. We are aware that the Office of Personnel Management (OPM) is working to implement the changes needed to better serve federal retirees. As OPM modernizes and improves the federal retirement system, we request that you provide a timely response to the following questions:
- A recent report found that OPM received close to twice as many retirement claims in January 2023 as it did the previous month. What is OPM’s plan to handle the increased caseload without further extending processing time?
- Is OPM adequately staffed? If not, in which office in the agency are additional staffing resources most needed?
- What assistance from Congress does OPM need to maintain a fully staffed workforce and process retirees’ applications in a timely manner?
- A Government Accountability Office (GAO) report found that OPM has a continued reliance on paper-based applications and manual processing, which contributes to processing delays. OPM’s 2022-2026 strategic vision includes an initiative to modernize the application process, including developing an electronic application form and an electronic system to store retirement information. A pilot digital retirement system, which is based on OPM’s modernization initiative, already has been rolled out. How many retirees has the pilot served so far? What is OPM’s plan to expeditiously expand the program across the agency? What is the estimated cost of implementing digitization?
- The same GAO report found that OPM uses methods, such as hiring additional staff and using overtime pay to address large caseload amounts and understaffing issues; however, it also found that OPM does not “measure overtime productivity or correlate overtime data with application processing data.” Does OPM plan to measure how these strategies affect application processing and productivity in the future? What other strategies is OPM using to reduce processing time, and how is it measuring the effectiveness of those strategies?
- Reports have shown that incomplete applications are contributing to the delays. What are the underlying reasons for the incomplete applications? Is the application sufficiently accessible to all applicants? Does OPM provide timely assistance with the process, either by phone, online, or another method? What is OPM’s plan to cut down on the number of incomplete applications?
- There are third-party consulting companies that advertise assistance to federal retirees to speed up the processing of their retirement claims. Is OPM aware of these companies? What impact, if any, do they have on the speed by which OPM processes retirement claims? If they have no impact, what outreach is OPM conducting to prevent retirees from unnecessarily paying for these services?
We cannot fail to serve the public servants who have dedicated so many years to keeping our government running. We look forward to your timely response to this letter.
