OPM’s ‘Retirement Quick Guide’ Aims To Tackle Immediate Challenges For Retiring Feds

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The Office of Personnel Management took a step to address more immediate concerns from retiring federal employees, ahead of the agency’s long-term efforts to modernize retirement services.

A new “retirement quick guide,” which OPM published Monday, aims to help federal employees and recent retirees better understand and navigate the current federal retirement process.

“This is a need right now,” Lori Amos, OPM’s deputy associate director for retirement services, told reporters Monday. “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. This is for today.”

OPM’s retirement services division, the office through which all federal employees must eventually apply for retirement, has often received criticism for long wait periods to process retirement applications and clunky IT systems. 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.

While not offering a definitive improvement to the processing time itself, OPM’s new guide aims to help feds get a clearer picture and timeline of the process, to help ease their transition to retirement. With the new guide, OPM said it hopes to proactively answer some of the more common questions about federal retirement, most notably, “what is the status of my retirement application?” Amos said.

Amos said the end goal for the new retirement guide is to reduce errors in applications, and by extension reduce the timeline to process retirement applications, as well as the backlog of pending retirement claims at OPM. The retirement backlog at OPM is on the decline, but still sits more than 7,000 cases above the agency’s steady-state goal of 13,000 pending claims.

“The guide explains to applicants exactly what’s needed. Or it gives them links to information so that they’ll know what’s needed. They’ll know the forms that they need to complete. They’ll know the forms that require a digital signature,” Amos said. “What we’re trying to do is pull together information that we’ve made available on the website. It’s critical information that’s needed, so that we have a complete package when [the application] gets to OPM.”

What’s in the quick guide?

In the guide, federal employees can see an outline of the steps they should take prior to retirement, as well as links to more information about different benefits options and factors that may delay retirement processing. Some of the most common reasons for a delay are missing signatures or missing forms, especially if a retirement applicant worked at multiple different agencies during their career.

The guide also explains each step of the process from OPM’s perspective, and what happens to an application during each step. Federal employees will also find a list of links to more information, including a BENEFEDS overview, handbooks for CSRS and FERS retirement and a phone number to contact OPM’s Retirement Support Center. The guide combines and condenses information that previously sat on multiple different pages on OPM’s website. OPM developed the guide by considering the most frequently asked questions from prospective retirees, conducting focus groups and gathering feedback from recent retirees and benefits officers about retirement processing.

“What we learned in developing the guide is that most applicants don’t understand where their case is in the process or who has the case. They think that the case is here with OPM, but in the first 30 or 45 days, it’s still with their agency and the payroll centers,” Amos said. “By the time we were getting the applications, we recognized that there was a need for federal employees, those that are planning for retirement, so that they can plan ahead. This is information that they need to know before submitting that application.”

Amos said she hopes the guide will help employees understand at a more granular level who to reach out to with questions, based on the timeline for their application.

“What I’m hopeful for is that now, we have connected the dots between the three primary leads in this process — the agency, the employee and OPM,” Amos said.

The National Active and Retired Federal Employees (NARFE) Association, an advocacy group focused in part on retirement services for federal employees, said OPM’s new guide is a step in the right direction. It will likely help reduce confusion and uncertainty for retirement applicants, and may also reduce the number of calls into OPM from applicants seeking answers about the status of their claims, said John Hatton, NARFE’s staff vice president for policy and programs.

With extra time and resources likely becoming available, Hatton said he hopes OPM will turn its attention to the larger problems with retirement services, and go beyond just improving the communication around the current situation. Beyond an overview of the retirement process, Hatton said OPM should develop case tracking systems to communicate progress as it occurs — an effort that would prove more useful in the long-run.

“Rather than accept long processing times, we encourage process improvements and modernization, such as the use of an online retirement application integrated with OPM processing systems, to lessen them,” Hatton told Federal News Network.

OPM plans to update the new guide monthly. But to be able to provide real-time updates on the status of retirement applications, the agency would need to overhaul and modernize the retirement services system.

“We don’t have the system to be able to provide real-time status of individual cases — we’re still a paper-based process,” Amos said. “Until we’ve modernized and we have a case management system where we can track electronically where cases are located, we won’t be able to provide a unique real-time status for each case.”

More plans for retirement services on the horizon

Beyond this more immediate response to some of the common pain points for retiring federal employees, there are more long-term efforts at OPM to modernize retirement services as a whole. OPM’s budget request for fiscal 2024 includes increased funding for retirement services, to address legacy IT and make some large-scale changes.

OPM Chief Information Officer Guy Cavallo is planning to approach IT modernization in small bites. He said there will be a clearer plan for retirement services in the agency’s upcoming IT strategy for fiscal 2023 through 2026.

In the meantime, OPM has made other recent updates for retirement services to try to reduce the retirement backlog. The agency added a chatbot for users to ask and get answers to common questions, and increased staff in its retirement services call centers.

Once more modernization efforts begin to take effect, OPM can update the guide to reflect the changes — but the details of that are still up in the air.

“Once we start to embark on this IT modernization effort, we don’t know what this guide may look like. If it’s automated, this form itself could be digitized,” Amos said. “That’s to be determined, but I would hope that once our customers get accustomed to using this guide, and the information that’s on the guide, that we somehow can incorporate that into our future state.”

Citation: FederalNewsNetwork

May 22, 2023

 

Federal Retirement Wave Starting? 10 Questions if You Are Considering Moving On

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Before you decide to put in your retirement papers this year there are important issues you should consider.

The last few months, I have been hearing from many of my federal friends and clients that they are retiring this year and wondering about their deeper motivations for leaving federal service. The Covid pandemic has lessened as an employment issue and now many federal agencies have ended popular telework polices and are requiring more in-person work at assigned worksites. Maybe they don’t want to go back. Other factors include stressful working conditions at front line agencies such as the Transportation Security Administration, the Customs and Border Patrol, the United States Postal Service, and the Federal Emergency Management Agency.

Federal employees with heightened on-the-job pressures may naturally eye retirement. While departures from the federal government only increased by around 11,000 in 2022, my sense is that employees who do not want to return to the office are viewing retirement as an attractive alternative.

If you are in this camp or considering moving on for any reason, before you decide to put in your retirement papers there are important issues you should consider. Please click HERE to find out more.

 

USPS Reports 2nd Quarter Fiscal Year 2023 Results – Net Loss For the Quarter Totaled $2.5 Billion

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  • Continued progress on the Delivering for America plan
  • Mail volume declines, operational inflation and elevated retirement expenses continue to negatively impact financial results
  • Service continues to improve with 98 percent of the nation’s population receiving their mail and packages in three days or less

WASHINGTON – The U.S. Postal Service today announced its financial results for the second quarter of fiscal year 2023 (Jan. 1, 2023 – Mar. 31, 2023). On a generally accepted accounting principles (GAAP) basis net loss for the quarter totaled $2.5 billion, an increase in net loss of $1.8 billion, compared to a net loss of $639 million for the same quarter last year. On a non-GAAP basis, adjusted loss was $498 million, compared to adjusted income of $427 million for the same quarter last year.

Results under GAAP include costs outside of management’s control of $2.0 billion for the quarter, an increase of more than $900 million, compared to the costs outside of management’s control of $1.1 billion for the same quarter last year. Costs outside of management’s control include retiree health benefits expense eliminated by the Postal Service Reform Act (PSRA) which were therefore not incurred this quarter, as well as other costs that increased this quarter when compared to the same quarter last year like retiree benefits expense for the amortization of underfunded Civil Service Retirement System (CSRS) and Federal Employee Retirement System (FERS) plans, and workers’ compensation expenses caused by actuarial revaluation and discount rate changes. The Postal Service reports its adjusted results excluding these costs.

“The Postal Service is making rapid progress with our 10-year transformation and modernization plan, which has already produced strong service performance and efficiency improvements and is creating a much more capable and effective operational model for the nation,” said Postmaster General and CEO Louis DeJoy. “We continue to focus on achieving break-even financial results for the 10-year period, although inflationary and economic conditions, as well as administrative hurdles, have proven difficult. The increase in the pace of change now required to achieve our financial goals will continue to be balanced with providing service performance throughout the nation.”

Total operating revenue was $19.3 billion for the quarter, a decrease of $484 million, or 2.4 percent, compared to the same quarter last year. Click HERE to read more.

Retiring Mid-Year? Consider Front-Loading Your TSP

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Do your plans include retirement this year? If so – good for you! Many people choose to retire at the end of the year. December 31, 2023 will be a popular day for FERS employees to retire. Of course, once you are eligible to retire, you can pick any day you choose. I retired on February 28th and my wife retired on November 27th; we were two of many who chose to retire on days other than December 31st.

If you’re one of those who is leaving at the end of the year and have been maxing out your TSP contributions for the last several years, just keep on doing what you’ve been doing, and you’ll have maxed out again by the time you retire. However, if you choose to retire in the middle of the year, you may want to consider “front-loading” your TSP.

In 2023 you can contribute $22,500 to the TSP, plus another $7,500 if you are 50 or over. That’s $30,000 that most retirees can contribute.

If you are retiring in the middle of the year (and if you can afford it), you can accelerate your TSP contributions so that you hit the maximum by the date that you leave. Let’s say you are planning on retiring at the end of June, and let’s assume that you will leave at the end of the 13th pay period of the year. If you contributed $2,308 per pay period, you would reach the full $30,000 at the end of the 13th pay period.

$2,308 per pay period is an amount that is out of the reach of many federal employees nearing retirement. Nonetheless, you can still accelerate your payments (say, by increasing your contributions from 10% to 15% of salary) and end up with a larger amount in your TSP when you leave. It’s never too late to put more money in your Thrift Savings Plan.

Did you know that when you take a loan from your TSP account, the transaction will include a proportional amount from each balance (traditional and Roth)?

 

Citation: FEDweek Published: May 8, 2023

The (Not So Pretty) FERS Origins Story

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The law creating FERS also included a provision allowing employees under CSRS to switch to it voluntarily. Image: Orhan Cam/Shutterstock.com

It’s May 1986. The Cosby Show and Family Ties are the top-rated TV shows. Top Gun starring Tom Cruise and Cobra starring Sylvester Stallone are boffo box office. Addicted to Love by Robert Palmer and Kiss by Prince top the pop music charts.

In federal offices, while the Macintosh computer has been on the market for two years, the technology focus is on the new fax machines that can also scan and print on plain paper. Besides, for those relatively few employees who need a computer at work, there’s the next generation of the IBM PC featuring slots for two 5 ¼ inch floppy disks, each capable of storing an astonishing 160 kilobytes per side!

And in Washington, the Republican Reagan administration and the Democrats controlling Congress are casually making decisions affecting the financial futures of millions of future federal employees and their family members.

That’s when the Federal Employees Retirement System was enacted into law. Up until then, FERS existed only in theory. The Social Security reforms of several years earlier had ordered that all federal employees hired after 1983 be put under that system as a way of getting more money paid into it. That was done on the premise that those employees would fall under a new system to include Social Security, a 401(k)-type program to be called the Thrift Savings Plan, and civil service annuity benefits less generous than those of the only federal retirement program existing at the time, the Civil Service Retirement System. Filling out the details had been left for later.

Among the details emerging as the concept was fleshed out were several provisions making FERS less valuable to employees than CSRS. The main one, of course, was that the basic benefits formula yields civil service annuities worth only about half of a CSRS annuity for employees with the same time of service and high-3 salary level. That was justified as an offset to the benefits that FERS employees would receive from Social Security–compared with the CSRS system that doesn’t include Social Security—plus the value of employer contributions into the TSP for FERS employees.

Fair enough. But that wasn’t all. For example, there were several provisions whose origins never were made clear, such as denying FERS employees the kind of credit toward years of service that CSRS employees received for unused sick leave in their retirement calculation. Another was denying FERS employees the right to make payments to recapture prior service time if they had withdrawn their retirement contributions at a break in service.

Both of those eventually were repealed. Another involved cost of living adjustments to those annuities. Where CSRS retirees receive full COLAs as indicated by an inflation measure regardless of their age at retirement, FERS generally pays no COLA before age 62, and even then, there is a reduction the indicated figure is above 2 percent. Specifically, the FERS COLA is capped at 2 percent if the figure is between 2 and 3 percent, and is 1 percentage lower than an indicated figure of 3 percent or more.

In some years that doesn’t matter but in others the partial reduction hits and in yet others—as in 2022 and 2023—the full reduction applies. That has led to calls to repeal that provision, as well, with bills having been reintroduced in each Congress for a number of years.

The origin of that provision, too, seemed to have been lost to history. However, in a recent report examining the repeal proposal, the Congressional Research Service unearthed a valuable find, in the form of statements from civil service leaders at the time.

For example, it found that then-Rep. Michael Barnes, D-Md., had said that the FERS COLA provisions might be interpreted as a “capitulation on the commitment we’ve maintained to federal retirees to protect their benefits from inflation.”

But he insisted that “In the context of the overall retirement plan, an indexed Social Security program, coupled with interest earning, tax-sheltered savings [in the TSP], can provide annuity growth more than capable to keeping place with rising costs.”

Sen. Thomas Eagleton, D-Mo., said this:

“The federal unions, who exhibited statesmanship throughout the entire process, receded on some highly important points, such as a cost equivalent to the civil service retirement system and a guaranteed full COLA for retirees. The unions fully support today’s conference report. The administration, which had hoped for a lower over-all cost than the bill achieved, an increase in the federal retirement age, and an accrual formula based on high-5 salary, rather than high-3, also swallowed hard and it, too, fully supports the report.”

So there you have it, FERS employees and retirees. Your retirement inflation protection was traded away like a backup running back in a fantasy football league.

One last point. The law creating FERS also included a provision allowing employees under CSRS to switch to it voluntarily. In that window and one that followed several years later, only low single-digit percentages did so.

Eagleton, though, said at the time the bill was moving through Congress that “my reading from staffers and colleagues is they can’t wait to join the new system.”

Looking back, that produces a bigger laugh than does a rerun of The Cosby Show or Family Ties.

Citation: FedWeek Published: