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OPM will stop shorting retirees' early payments

Nov. 8, 2010 - 06:33AM   |  
By STEPHEN LOSEY   |   Comments
In an exclusive interview Nov. 3 with Federal Times, OPM Director John Berry said he has instructed Bill Zielinski, associate director of retirement and benefits, to do whatever he can to maximize interim payments.
In an exclusive interview Nov. 3 with Federal Times, OPM Director John Berry said he has instructed Bill Zielinski, associate director of retirement and benefits, to do whatever he can to maximize interim payments. (Army Times Publishing Co.)

Office of Personnel Management Director John Berry last week pledged to increase new retirees' interim annuity payments even if it means some will temporarily be overpaid.

Currently, more than 38,000 recent retirees receive interim annuities which are sometimes as low as half of what they are owed for months while overwhelmed OPM employees calculate the correct amount.

But in an exclusive interview Nov. 3 with Federal Times, Berry said he has instructed Bill Zielinski, associate director of retirement and benefits, to do whatever he can to maximize interim payments. Zielinski hopes the changes will be in effect by the end of December.

"We're going to do everything we can to meet, to the greatest extent possible, an estimate that is as high as we can go that is reasonable," Berry said. "This is 100 percent our responsibility. We need to own this, we need to fix this and we're going to."

Berry's changes are in response to an Oct. 18 story in Federal Times that reported many recent retirees wait six to 12 months for OPM to calculate their complete annuities. Frustrated retirees said they are trying to make do with annuities that are thousands of dollars less than what they are owed. In some cases, they are having trouble making ends meet.

The government has failed in four attempts costing $136 million at modernizing its paper-based method of calculating pensions over the last 23 years. Berry's predecessor, Linda Springer, made cutting down on delayed annuities and retirement modernization a priority. But her attempt to create an automated system, called RetireEZ, failed in 2008. Since then, the issue has been on OPM's back burner and has seen no progress.

In an Oct. 20 press conference in response to the Federal Times story Berry accepted responsibility for the problem and promised to fix it.

And on Nov. 3, Berry and Zielinski went into more detail on their plans.

More to retirees The maximized interim payments are a stopgap measure intended to lessen the burden on retirees while OPM figures out a more permanent solution to eliminating the backlog of pending annuities. OPM said it hasn't decided exactly how it will maximize the interim payments, but Berry essentially ordered the agency to stop shortchanging retirees, even if it means OPM overpays a few people. Berry said anyone who is overpaid will have to repay the balance to OPM when that person's complete annuity is calculated.

"I've asked the staff to look at all the different factors that affect interim pay and say, ‘Where is it we feel that there's not as much risk to where we can increase those numbers?' " Zielinski said. "It's still the same factors that have to be considered. The question is, as you start taking a look at where we establish that cutoff point … can we increase that amount?" Today, even when OPM has all necessary information on hand the day someone retires, that retiree usually gets roughly 90 percent of what he is owed. If the retiree's employing agency sends incomplete information to OPM, or if there are other conditions that complicate the annuity calculation such as if the retiree also receives a military pension, has excessive leave without pay or service for which no records exist, or worked part time for a portion of his career that could lower the amount of the interim annuity while OPM straightens the file out.

Berry said the fastest way OPM can resolve the backlog is to hire more employees and have them work overtime. He said OPM made a mistake when it cut its staff in anticipation of the automation efficiencies RetireEZ was meant to yield. OPM is waiting for congressional approval to hire 40 employees to help calculate annuities. It is already advertising to fill those positions and considering candidates.

"We're trying to shorten the lag so we can get troops on the line as soon as we can," Berry said. "If it doesn't happen, that's going to be a disappointment and will be a lot slower process in terms of fixing this."

Berry said Oct. 20 that he had in the meantime temporarily transferred 40 employees to the 130-person division handling retirements.

But employees are also going to have to work a lot of overtime to solve this problem, Berry said. And he's not sure how much overtime funds the 2011 budget will provide.

"Both of those [the 40 new hires and overtime] are probably the two most important things that are going to move this needle, in terms of us being able to resolve the backlog and speed," Berry said. "We're not waiting on that entirely because there are some of these process improvements, if we can get information quicker. But I don't want to kid anybody the big nut is more resources on this."

Berry has ordered Zielinski and OPM's budget office to estimate how much overtime would be required to eliminate the backlog, and how much that overtime might cost.

But OPM has another deadline coming in fast: The vast majority of federal retirements occur between January and March each year. And though it's unclear how many feds will retire in early 2011, it's sure to add tens of thousands of new cases to the existing backlog of 38,000 cases.

"We know that there's another backlog looming," Berry said. "We've got to get caught up so we can be in a good place to handle" the new retirements.

Automation critical To solve the problem once and for all, Berry said the government also needs to get its records in better shape and speed up record transfers from the employing agency to OPM.

Zielinski said OPM usually gets some information electronically within five to seven days of someone's retirement. But about 44 percent of those electronic files lack critical information needed to calculate annuities, and some agencies still mail paper records to OPM to complete the files. Once those paper files arrive at OPM's headquarters, employees must manually key information into computers, which lengthens the process even more.

OPM pledged to work with agencies to find ways to send data electronically and eliminate the paper trail. For example, Zielinski said OPM will sit down with the Labor Department to examine how Labor sends workers' compensation records and find the logjams.

"We're going to be coming up with a plan for when and how we can start to receive that data directly, so it can really speed up," Zielinski said. "It's a matter of walking through the process, step by step, to see where the most time is spent."

During Springer's tenure, OPM began scanning hundreds of thousands of paper files in anticipation of the new automated system. That effort is still not finished, Berry said. And files that have been scanned often have incomplete information and additional notes scrawled in the margins or on Post-it notes that must be manually entered into computers.

But even when documents are scanned, OPM has no system that can automatically pull information from them and make calculations. OPM employees have to open those electronic files, one at a time, to find the data needed to make annuity calculations. Berry said OPM needs a new computer system that can do those retirement calculations electronically and accurately.

Berry and Zielinski also held labor-management partnership meetings with union leaders on Oct. 28 and 29 to figure out other ways to improve the process. He said OPM will continue talking to the American Federation of Government Employees to find ways to improve customer service several retirees complained to Federal Times that they could not get a straight answer from OPM on their annuities and calculate annuities faster and more accurately.

Zielinski said AFGE representatives have helped OPM identify spots where record transfers are unnecessarily delayed.

Dave Snell, retirement benefits director for the National Active and Retired Federal Employees Association many members of which have complained about OPM delays in getting them their full annuities said he was glad to hear Berry's pledges, and thinks OPM is now concentrating on the right areas.

"With all of these measures, it's a good plan," Snell said. "He's using what resources he has, and he's concerned about it, and I think that will work."

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