A glitch in the federal retirement system that affected as many as 12,000 retirees will be fixed by mid-April, according to Office of Personnel Management Director John Berry.
OPM has been working since 2008 on a fix to its Service Credit System, which calculates retirement annuities for those who either did not contribute to the retirement fund during a certain period, or those who received a refund of retirement contributions. Berry said the agency now is testing a new system, and expects to send out revised statements with correct retirement calculations by April 15.
Currently, it can take OPM anywhere from five to 40 business days to complete an annuity calculation request, because officials must determine retirement payments manually.
Berry was responding to a Feb. 2 letter from Sen. Barbara Mikulski, D-Md., criticizing OPM and the overall retirement system in particular over the lengthy processing time related to calculating annuities.
"I know that problems with this system started long before you became director and what you inherited is scandalously wasteful and ineffective," Mikulski wrote. "But, during this terrible recession, it is unacceptable that federal employees cannot get the information they need to plan for retirement." Mikulski's state is home to many federal employees.
Other upgrades to the federal government's retirement systems, such as moving from paper to electronic records, likely will take more than a year to complete, Berry said. OPM could not provide a cost estimate for the upgrades.
"When I arrived at OPM in April of 2009, I inherited a retirement program that was and remains in need of significant repairs, despite the significant sums of money that the previous administration had spent on modernization efforts," Berry wrote to Mikulski on Feb. 22. "I have asked Deputy Director Christine Griffin to devote the majority of her time to this effort, which we would like to bring to a successful conclusion without additional wasteful expenditures of appropriated funds."
According to a 2009 Government Accountability Office report, OPM's attempts to modernize its retirement system date back to 1988. More recently, the agency has pursued initiatives such as RetireEZ and Retirement Systems Modernization. According to the report, contracts the agency signed in 2006 with Hewitt Associates, Accenture Ltd., and Northrop Grumman Corp for these initiatives cost about $360 million.
Daniel Adcock, legislative director for the National Active and Retired Federal Employees Association, said his organization still receives calls about the retirement system, but the number has dropped since OPM began its reform efforts in 2005.
"I think the reason why it's such a complex problem is that frequently, federal employees may have worked at a bunch of different agencies," Adcock said. "It's all a question of collecting the dots of their salary history and coming to the final annuity amount."