The same problems continue to plague OPM’s retirement services

Reliance on a paper-based system, insufficient staffing and incomplete applications remain the three top barriers to timely processing of federal employees’ r...

For years, retiring federal employees have faced the same set of challenges in the Office of Personnel Management’s retirement processing division.

Reliance on a paper-based system, insufficient staffing and incomplete applications remain the top three barriers to timely processing of federal employees’ retirement applications, OPM’s Office of Inspector General said in a Nov. 15 report.

Challenges in OPM’s retirement processing are far from new. The IG pointed to a 2019 Government Accountability Office report, which said an unfocused approach to IT modernization, inconsistent agency leadership and persistent staffing challenges were hindering improvements to retirement processing.

“Retirement Services continues to face the same obstacles discussed in the GAO report with its largely paper-based process and the system modernization project being years from completion,” the November IG report said. “According to Retirement Services’ management, Retirement Services has made some progress to improve the average processing time and the retirement claims processing backlog. However, we determined that the targets for these measures have not been consistently met since the GAO report was issued in 2019.”

In that 2019 report, GAO made six key recommendations to vastly improve retirement processing for the federal workforce. Five of the six recommendations remain open.

It’s not without significant efforts from OPM to try to turn things around. Across several presidential administrations, OPM has attempted to modernize the paper-based retirement process for the federal workforce.

With every attempt, there have been problems — a lack of consistent agency leadership, a proposed merger with the General Services Administration and limited resources have all stymied OPM’s efforts over the years.

OPM currently has a major IT modernization plan for Retirement Services underway, which the agency laid out in its fiscal 2023-2026 IT strategic plan.

Application errors significantly slow processing times

OPM’s Retirement Services division, the office through which all federal employees must eventually apply for retirement, often receives criticism for long wait periods and clunky systems.

Part of the reason for delays in retirement processing, though, comes from the retiring employees themselves, according to OPM’s IG report. When there are missing components of an application, that slows down the process and can lead to frustration.

In cases where employees’ applications are incomplete, it takes an average of more than 108 days before they receive their first payment, according to a small sample of applications that OPM’s IG reviewed.

If an application is complete, however, that time is cut in half — and it only takes about 53 days to get a payment.

Despite that major disparity, OPM’s Retirement Services doesn’t distinguish between complete and incomplete applications in its monthly reports.

“The lack of transparency for healthy versus ‘incomplete’ application packages limits the quality of information being provided to external parties as the main cause for why Retirement Services has not met its goal for processing retirement application packages within 60 days,” OPM’s IG said in the November report.

The IG recommended that OPM begin offering more transparency in its monthly reports. Although OPM agreed that it’s an important distinction, Retirement Services officials said that the current legacy technology prevents them from tracking applications to that level of detail.

But as part of its IT modernization plan, OPM said it hopes to “establish a means to accept retirement applications electronically and to reject [incomplete] submissions,” the IG report said.

A continued struggle to meet internal goals

The current standard that OPM’s Retirement Services division goes by is to process new retirement applications within 60 days of receiving them. But OPM has long struggled to meet its own time-based goals to process employee retirement claims.

Currently, it takes between three and five months, on average, for OPM to process a retirement claim — measuring from an employee’s official retirement date, to the date of the first retirement deposit into the individual’s bank account. In more extreme cases, federal employees may have to wait a year or more before receiving their first retirement deposit.

OPM also sets a goal for itself of maintaining a stable inventory of 13,000 unprocessed applications at any given time. But again, that goal is not being met.

During October, OPM’s backlog of retirement claims trended upward. Currently, there are 16,678 unprocessed retirement claims — an increase of 1,226 claims since September. It’s also 3,678 claims higher than OPM’s steady state goal of 13,000.

OPM has received a massive influx of retirement claims over the past couple of years, which does make it more difficult to maintain a lower processing time. OPM added 114,505 annuitants in fiscal 2022, compared with 96,956 annuitants added in 2021.

Modernization plans for retirement lie ahead

The challenges that OPM now faces are two-fold: address immediate concerns from retiring feds, and simultaneously plan and execute a years-long modernization project.

In the short term, OPM earlier this year published a “retirement quick guide” to answer common questions from feds about the processing of their applications. While not offering a definitive improvement to the processing time itself, OPM’s guide aims to help feds get a clearer picture of the process and answer common questions from retiring feds.

In one example, after three months of waiting, one retirement applicant expressed concern about the lack of response from OPM.

“I haven’t heard anything at all, let alone that my application for retirement is completed,” the employee wrote in an email to Federal News Network earlier this year. “Am I to worry? How do I know if my application is being worked on? Do I wait or do I question this? And if so, to whom?”

With the retirement quick guide, OPM said it hopes to proactively answer some of these more common questions about federal retirement.

“This is a need right now,” Lori Amos, OPM’s deputy associate director for Retirement Services, told reporters during a press conference in May. “This is our current state — we’re paper-based. We need to manage expectations, we need to get information to our customers, because we don’t want them worried about their annuity payments.”

And in the long term, there’s reason to believe that the road to IT modernization may be turning the corner. OPM is currently led by its longest-serving director since 2015, and OPM’s Office of the Chief Information Officer (OCIO) earlier this year published a clear and timeline-driven plan for how to reach a modernized, cloud-based retirement application system.

OPM’s IT strategic plan for fiscal 2023-2026 focuses on improving retirement processing “by modernizing platforms to create technology solutions and user interfaces that offer comprehensive access to retirement services securely and intuitively,” the plan states.

“As Retirement Services modernizes its business operations, OPM’s OCIO will support it with a commitment to providing responsive, intuitive, online self-service, and human-assisted services to federal employees and retirees,” the plan adds.

It’s a massive undertaking, and to actualize it, OPM CIO Guy Cavallo plans to approach the years-long modernization project in “small bites,” he told Federal News Network in May.

For example, OPM launched an online retirement pilot at just a few select agencies. OPM plans to use the results of the pilot to inform broader modernization tactics. In the short term, OPM also launched a chatbot and increased the number of call center agents to try to address the large retirement backlog.

Of course, all of these efforts will also be based on available resources, OPM said in the IT strategic plan. Like many agencies, OPM’s funding levels for fiscal 2024 remain undetermined and pending in Congress. OPM said, though, that the costs for the modernization project have already been assessed through fiscal 2028.

“Retirement Services is committed to modernizing its IT initiatives and is currently working with OPM leadership to prioritize and identify funding for fiscal 2024 and beyond,” OPM said.

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