Is OPM Processing Federal Worker Pension Claims on Time?

5/09/2013

House Oversight and Government Reform Committee Subcommittee on Federal Workforce, U.S. Postal Service and the Census

Chairman Farenthold, Ranking Member Lynch, and other Committee Members, thank you for allowing me to share with you our thoughts and concerns on federal pension claims processing. NTEU represents over 150,000 employees and retirees from 31 different agencies.

It is clear that there have been serious problems with OPM’s processing of federal retiree annuity payments. I have contacted OPM numerous times to ask what is being done to get accurate and timely pension checks to my members. The long wait to receive a first check in retirement and the even-longer wait to receive the full amount of an annuity check are problems I hear about too often. OPM contends that Interim Payments average 80.3% of the final annuity amount, but we have heard from many retirees who are receiving less than half that for long periods of time.

Particularly hard hit are those retirees who are eligible for the FERS Retirement Supplement. OPM notes that it cannot reflect the Supplement in the interim payments because the agencies do not provide an estimate of the annuity supplement. For a federal worker making $50,000 when they retire, this can mean a loss of almost $800 per month. It is unclear why the Social Security Administration can’t make that information available in a timely manner.

In January, 2012, then-Director John Berry stated that the delays in retirement processing at OPM were unacceptable and that eliminating the backlog was his highest priority for 2012. When Director Berry set out his Strategic Plan for Retirement Services, he stated a goal of 90% of retirees receiving their full annuity payments within 60 days of retirement by July 2013. He rehired eight experienced retirees to process retirements and began approving overtime for those specialists who were the fastest and most accurate in processing claims. He hired several new legal administrative specialists, whose training was completed last July. In addition, OPM began working with agencies to streamline the process by digitalizing employee records, with the hope of completely computerizing the process in the future.

Part of the strategic plan included a monthly report posted on the OPM website that tracks the backlog, the number of claims expected to be received, the actual number received and how many have been processed. In January, 2012, the backlog was 61,108 cases. The numbers consistently decreased over 2012, ending December with a 26,402 backlog. It was all heading in the right direction until sequestration became a reality.

In January 2013, retirements slightly exceeded OPM projections for new cases. February numbers were alarmingly large, due in great part to the U.S. Postal Service’s buy-out program. March, too, was more than twice the expected number. We believe that in addition to the Postal buyout program, the constant attacks on federal employees, the three year pay freeze, the threats of government shutdowns and now furloughs are also contributing to the larger number of retirements. Fifty-three percent of the federal workforce is eligible to retire, and many are simply no longer willing to endure the current challenges of being a federal employee.

So far, the three months of retirement claims for 2013 are almost 50% of the claims for the entire year of 2012. As those numbers went up, so, too, did the backlog numbers. The backlog is now 36,603. Then, last week, the Associate Director of Retirement Services announced on the OPM website that because of the budget cuts forced on the agency by sequestration, overtime for employees in his division would have to be canceled. The OPM Call Center will also have to reduce its hours – by nearly three hours each weekday. The Associate Director wrote, “While it is our hope that process improvements developed over the past year will ameliorate some of the adverse effects of these necessary actions, retirees should expect an increase in the time required to process their claims or respond to inquiries.”

Sequestration is a bad idea and an abdication of Congressional responsibility. It is strangling the agency budgets of my members, who already have increased workloads due to increased retirements and previous budget cuts. It will cause serious financial hardship for those federal employees who will be furloughed and now, for those who seek to retire. OPM simply cannot succeed in its efforts to fix the problems of delay in processing pension checks while the sequester is in place. NTEU urges you to end sequestration.