Federal employees who have or are planning to retire soon could wait months longer than usual before receiving final annuity payments due to processing delays at one of the major payroll providers.

At least three agencies have warned employees in recent months of delays at the National Finance Center, one of the four major federal payroll providers that processes and submits retirement packages to the Office of Personnel Management for further review.

Federal News Network reviewed letters from two of the agencies that described retirement processing delays and spoke with a retiree from a third agency, which also warned the wait for annuity payments could be longer than normal.

Two sources requested anonymity and asked that their agencies not be mentioned. The agencies are both large cabinet departments and NFC customers.

One agency offered an explicit warning to employees and retirees and acknowledged the toll the delays could place on them financially.

“NFC is experiencing delays in submitting retirement packages to OPM due to system processing changes and staffing challenges related to the COVID-19 pandemic,” a letter from Customs and Border Protection, dated in late January, reads. “We are aware of this tremendous financial burden this is having on retirees and we are committed to doing everything to remedy this problem as soon as possible.”

It usually takes NFC about 30 days to send completed retirement paperwork to OPM for processing, according to both CBP and the National Finance Center. But CBP said its payroll provider was currently taking anywhere from 60-to-90 days to process and submit retirement paperwork to OPM.

Those delays are causing subsequent delays for retirees, CBP said.

“Under normal circumstances, it takes approximately two months after retirement for retirees to receive initial interim payments, and up to six months to receive full annuity payments,” the CBP letter reads. “However, it could take up to six months to begin receiving interim annuity payments, and it could take up to 12 months to receive full annuity payments. Given this, CBP recommends that anyone considering retiring within the next three months have a reserve fund to make up the difference between the interim and full retirement payments.”

The letters that Federal News Network reviewed from other NFC agencies didn’t specify how long exactly retirees might wait to receive interim and final annuity payments; they simply described general delays.

“NFC is currently experiencing delays in processing retirement packages due to the manually intensive nature of this activity,” USDA said in a statement to Federal News Network. “This manual process has been further complicated by expanded health protocols and telework measures necessitated by COVID-19 to ensure the safety of our employees. NFC has redoubled its efforts to effectively process and reduce delays with retirement submissions including flexible on-site work shift options and expanded physical safety measures that comport with USDA COVID-19 protocols.”

NFC didn’t specify how its  COVID-19 protocols had slowed its own processes, and it didn’t respond to questions about the specific nature of its delays and how long exactly they were.

“NFC expects to return to its 30-day metric for completing its portion of retirement processing by the end of March 2021,” USDA said. “To date, NFC is not aware of any backlog in its processing of retirement applications that would cause a retiree to wait for partial and full annuity payments, respectively.”

In response to questions about the letter it sent its own employees about the retirement delays, CBP pointed to an NFC bulletin from last fall. It described recent enhancements to its ServiceNow platform, which the payroll provider is using to submit packages and manage inquires, but the move from “manual internal procedures to automated procedures” had created a backlog in cases.

“CBP is committed to ensuring that we minimize the impact of delays to our retirees as much as possible,” an agency spokesperson added.

Still, the delays have frustrated employees. The National Treasury Employees Union, which represents about 25,000 workers at CBP ports of entry, said the delays were “untenable,” especially after the most recent government shutdown showed many federal employees live paycheck to paycheck.

The union said it heard from CBP members who were informed of the delays after they had already submitted their retirement paperwork.

“Recent retirees should not be expected to live for up to 12 months without their full retirement income,” Tony Reardon, NTEU’s national president said in a statement to Federal News Network. “That is entirely unacceptable for anyone, but especially for frontline federal workers who have served their country for many years and relying on their federal retirement for economic security in their senior years.”

A long, complex and paper-based process

As most employees know, the federal retirement process can be long and complex. It starts at the agency level, where human resources verifies an employee’s retirement application and sends materials to the agency’s payroll provider for processing.

Payroll providers then calculate outstanding leave balances and prepare an “individual retirement record,” which includes details on an employee’s service, salary history and annual retirement contributions.

Then, payroll providers send an employee’s retirement record to the Office of Personnel Management, which begins its own verification process and takes steps to calculate a retiree’s annuity.

On many occasions, OPM can and will calculate and send an interim annuity payment to retirees while they wait for the agency to finish final annuity determinations. But OPM can’t begin any of its work until it receives an initial set of information about the retiree from the payroll provider.

“The pandemic has forced the agencies including us, NFC and others to reengineer the process and implement new protocols,” an OPM official familiar with the retirement process told Federal News Network. “We’ve been working with NFC and other payroll providers and agency providers to minimize delays. But each of them has been different in the way they’ve handled the pandemic.”

To date, it takes OPM an average of 77 days to process most retirement cases, but there are always outliers, the agency official said. OPM’s goal is to process most cases within 60 days.

According to OPM’s monthly processing data from February, cases that are processed within the 60-day goal are completed within an average of 45 days. For those that take longer, they took an average of 102 days.

Like every federal agency, OPM has implemented its own COVID-19 protocols for its retirement services employees.

Nearly 75% of OPM retirement services employees can telework for a portion of their week, up from roughly 40-to-50% before the pandemic. When employees must come to the office, they work in staggered shifts with masks, and they’re in socially-distanced seating arrangements.

Throughout the health crisis, some OPM employees have been out from work to recover from COVID-19 or care for a family member, the agency official said.

Those protocols have elongated an OPM process that’s still largely paper-based, but only slightly, the agency official said. OPM processing times have fluctuated above and below its 60-day processing goal for years.

The OPM official reiterated it can only control its own processing times, though it acknowledged federal retirees often associate the agency as the face of the entire retirement process.

Meanwhile, NFC reiterated delays would ease by the end of this month. And in its letter to employees, CBP said cases submitted to NFC after Dec. 11, 2020 would be processed and sent to OPM within 45-to-60 days.

“We are working with OPM to improve processing and institute technological enhancements where practicable,” USDA said. “Although some retirees could experience slightly longer than normal wait times for partial or full annuity payments, these delays are isolated and, once we become aware of any delay, we seek to rectify it as quickly as possible.”

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