The House Budget Committee’s report on Rep. Paul Ryan’s fiscal 2014 budget fills in a few more details on how it would affect federal employees. The budget, which the House passed March 21, would get rid of the Federal Employees Retirement System supplemental payment beginning in January 2014. That supplement is paid to FERS employees who retire before age 62, to replace the Social Security payment for which they are not yet eligible.
The bill also would eliminate student loan repayments for federal employees. And its 10 percent federal workforce cut would be achieved by allowing agencies to only hire one new employee for every three who leave.
Ryan’s budget also takes a page from the Simpson-Bowles commission and increases the amount federal employees contribute to their pensions. The House Budget Committee said the retirement benefit cuts could save $132 billion over a decade.
The Ryan budget is sure to run aground in the Democratic-controlled Senate. But some of these proposals could be resurrected later this year, as part of budget negotiations.
With federal retirements continuing to spike, it’s clear that the long-predicted retirement wave is here. Retirements in 2011 were up 24 percent over 2010 levels. And so far this year, retirements are up another 8 percent.
Federal managers, we’d like to hear about what the retirement wave means for you. Are you seeing one valued employee after another walk out the door? If so, how are you dealing with the loss of their years of experience? Are you getting ready for more retirements in the near future? If so, how are you preparing for that?
E-mail me at email@example.com to talk. If you’d like to talk anonymously, that’s fine.
The Office of Personnel Management has cut its backlog of unprocessed pension claims by 21 percent in the five months since it unveiled a new strategy to fix the longstanding problem.
According to statistics posted online today, OPM cut the backlog by 1,150 cases in June, bringing the backlog down to 48,323 unprocessed claims. In January, when OPM announced its plan to fix its problematic pension process, the inventory was 61,108.
But even though OPM has made progress so far in 2012, the size of the backlog is still far greater than it was in October 2010, when OPM Director John Berry pledged to fix the problem. That month — when Federal Times first reported that many retirees were waiting six months to a year for pensions that were often half of what they were owed — OPM said it had 38,400 cases backlogged.
Still, OPM is making progress. The backlog has now fallen for five months straight. And OPM processed 8,964 cases in June, about the same amount as it processed in May. That is more than the 8,500 claims it expected to process in June.
And OPM received 7,814 retirement claims last month, slightly fewer than the 8,000 it expected.
For more information on what OPM is doing to fix this decades-old thorn in its side, read our exclusive interview with Associate Director of Retirement Services Ken Zawodny here, and our original story on OPM’s new strategy here.
The Office of Personnel Management saw a hiccup in its pension processing efforts in April, when the number of claims processed dropped to 8,028. That was slightly below the 8,300 claims it expected to process that month, and noticeably below the 12,386 claims it processed in March.
But May brought slightly better news for OPM. According to monthly stats released today, the number of claims processed in May jumped back up to 9,066 — about 500 more than OPM anticipated it would process last month. This helped bring the size of the backlog down to 49,473 — about 5,100 fewer cases than it expected to have by the end of May.
And for the second month in a row, the number of retirement claims actually received by OPM was lower than anticipated. OPM expected 8,000 feds to retire last month, but only got 7,523 retirement applications.
Federal Times also reported earlier today that 18 percent of retirement applications last year had errors that then had to be fixed by OPM.
For several months, we’ve been tracking a disturbing increase in federal retirements — one which both complicated the Office of Personnel Management’s efforts to fix the pension process and suggests many feds have had it with the proposed pay and benefit cuts. But OPM’s latest stats show a surprising drop in the number of feds retiring.
OPM said it received 6,616 retirement claims in April. That’s 17 percent less than the 8,000 it expected to receive last month, and 15 percent less than the 7,773 feds who retired in April 2011. Up until this point, retirement claims for the first three months of 2012 were up roughly 11 percent from the same period last year. But when April’s numbers are factored in, that increase drops almost in half, to nearly 6 percent.
It remains to be seen whether April is a blip, or the start of a trend in which retirements slow back down to a more manageable pace.
The rest of April’s stats contained some mixed news for OPM. The number of claims processed dropped from 12,386 in March to 8,028 in April. That was slightly less than the 8,300 OPM expected to process last month.
But there was good news: Despite the slight decline in productivity, the decreased retirement claims helped OPM cut its backlog from 52,274 to 51,016 cases. OPM is now way ahead of the 55,078-case backlog it expected to have in April.
I’ve asked OPM for their thoughts on what might have caused April’s changes and will update this blog when they respond.
UPDATE: OPM just sent me the following statement from Associate Director Ken Zawodny:
The first pillar of our strategic plan is the most simple and most urgent: adding more people to the claims adjudication process. The new hires from January 2012 have completed their initial training and now require coaching and mentoring as they begin to process cases. This is an expected part of the training program and requires the most experienced and effective LAS’s to be coaches and mentors in addition to processing retirement claims. Our front line employees split their time in April between processing cases, training the new hires and working with Navy Lean Six Sigma Team to improve the adjudication process, especially for more complex cases. Strategic investments of time and expertise will continue into May. To date, we have processed 39,116 retirement claims compared to the 32,900 that we estimated having done at this time.
As Director Berry stated in the Strategic Plan for Retirement Services, 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.
The latest pension processing stats from the Office of Personnel Management contained an interesting nugget on retirement trends. Namely, that they’re continuing to rise in 2012, after shooting up 24 percent in 2011.
It’s not hard to figure out why. Agencies are offering federal employees buyouts and early outs left and right to deal with limited budgets. And with Congress constantly threatening to further freeze feds’ pay, increase their retirement contributions, or switch to a high-5, many feds are beating a path to the door.
Federal Times would like to hear from you about the still-increasing retirement trend, and how it touches you. Are your co-workers dropping left and right lately, and is that hurting your agency’s ability to get its mission done? Or are you yourself planning to retire soon, and why?
Write me at firstname.lastname@example.org if you’d like to talk. I’m interested in hearing from managers as well as rank-and-file employees. If you want to stay anonymous, that’s fine.
Office of Personnel Management Director John Berry’s plan to fix its longstanding pension processing problem got a relatively warm reception on Capitol Hill today. But there were some red flags raised, not least of which is the incredibly sprawling and antiquated set of IT systems and paper-based processes that the government relies upon to calculate new retirees’ pensions. OPM doesn’t have a real plan for straightening it out, the Government Accountability Office said, and needs to do more.
For example: OPM has 80 legacy systems that have to talk to roughly 400 other systems across the rest of the government, IG Patrick McFarland said. And those systems rely on roughly 3 million lines of custom code. If OPM decides to change or repair something in those systems, McFarland said, that is difficult to modify because the agency has to sift through all 3 million lines to find the one line in particular that needs tweaking.
Berry said some systems still even use COBOL, believe it or not, a dinosaur of a programming language that was first introduced 50 years ago.
As a result of all the IT problems, calculating pension payments is still largely a paper-and-pencil process — one that is made much more difficult when agencies don’t submit all the necessary documents. Which is what usually happens.
GAO’s Valerie Melvin also said that OPM’s plan “does not describe whether or how the agency intends to modify or decommission the over 80 legacy systems that support retirement processing.” She wants OPM to take a broader look at its overall IT system structure, and formulate a concrete plan for how it will straighten things out. ”There’s a lot more OPM can do,” Melvin said.
Senators on the Homeland Security and Governmental Affairs federal workforce subcommittee praised Berry for putting the plan forward, and IG McFarland said OPM is now on the right track.
But consultant George Nesterczuk, a former OPM official, blasted Berry for abandoning a full-scale, IT-based modernization of the retirement process and instead relying heavily on adding people. Although the previous administration’s Retirement Systems Modernization strategy that relied on commercial technologies crashed and burned in 2008, Nesterczuk said it “was a sound strategy and it should receive renewed consideration.”
In the meantime, pressure is mounting on OPM. Berry said OPM received 21,000 new retirement applications in January — traditionally the busiest month — which swelled the backlog to 62,000. But there was a bright spot last month — Berry said OPM processed 20 percent more cases this January than in January 2011, which he sees as proof the reforms are already taking hold.
He also pledged to report the size of the backlog to Congress on the fifth day of each month.
[Updated blog post to clarify that OPM's processing problems are a result of all of its IT difficulties.]
Former Minnesota governor and Republican presidential candidate Tim Pawlenty today called for scrapping the defined benefit pension in the Federal Employees Retirement System.
In a speech at the libertarian Cato Institute, which can be heard online here, Pawlenty said that federal employees should be “transitioned” from receiving both the FERS defined benefit and defined contribution plan, aka the Thrift Savings Plan, to just the TSP. This would bring federal retirement plans more in line with what the private sector offers, he said, since the private sector has largely given up on the defined benefit plan.
Pawlenty also said that federal employees receive far more compensation — both pay and benefits combined — than private sector counterparts, and that federal pay should be frozen further until the private sector catches up.
He also wants to take a look at the government’s step increase system of awarding pay increases to federal employees based on how long they’ve been in their current grade. And the federal workforce must shrink, and should only hire one new employee for every two who retire, Pawlenty said.
Pawlenty’s speech is a sign of the times. I can’t recall a prior presidential candidate ever talking about federal pay and benefits, beyond an occasional afterthought in a policy statement or letter to federal unions. But with the deficit shaping up to be a major issue in the 2012 elections and public sympathy in short supply for federal employees, they should expect more of such talk over the next year and a half — and brace themselves for bad news.
OPM said yesterday it is sending letters to many federal employees whose interest on retirement system deposits has been over- or undercharged for years, telling them how much they owe.
If you’ve received one of these letters or have otherwise found out there’s a problem with your service credit deposits, we’d like to hear from you. When did you find out there was a problem, and what were you told? How long did the problem go on? How much do you owe, or have you overpaid in recent years?
E-mail me at email@example.com if you’d like to talk. If you’d prefer to remain anonymous, that’s fine.
Federal Times would like to talk to people who invested in Wayne McLeod’s bond fund, which the Securities and Exchange Commission said ended up being a long-running Ponzi scheme that targeted federal and state employees. E-mail me at firstname.lastname@example.org. If you’d like to remain anonymous, that’s fine.