OPM hopes to solve retirement claims backlog with more staff

The government’s human resources chief acknowledged Wednesday his agency does not yet have an information technology plan to successfully tackle the major backlog of federal retirement claims.

Office of Personnel Management Director John Berry told Senate lawmakers that OPM is working hard to get to a place where federal employees’ retirement information is automated, but said the government is “still in a paper-pencil world.” OPM relies on data from other agencies to fully process federal retirement applications and most of that information is not automated, he said. “I don’t have the IT solution to address it [now],” Berry told the Senate Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia.

OPM has struggled since 1987 to fix a broken federal retirement processing system. On average, its takes 156 days to process a claim, but many retirees wait much longer than that for their full annuity payments. By the end of 2011, there was a backlog of nearly 50,000 claims. OPM last year abandoned a large-scale IT modernization project designed to fully automate the system after it failed to produce results.

Berry said eliminating the backlog is his highest priority in 2012. Earlier this month, OPM unveiled a plan that aims to eliminate the claims backlog within 18 months and to reduce processing times so that 90 percent of claims are administered within two months of receipt. The plan, which Berry outlined in his testimony, includes hiring more staff to process retirement claims, firing poor performers and incrementally upgrading technology to expedite payments. The strategy is composed of four pillars: people; productivity and process improvement; partnering with agencies; and partial, progressive information technology improvements. OPM also is considering giving bonuses to claims processing employees to motivate them.

“For the foreseeable future, we are dealing with a paper and pencil process,” Berry said. “That’s why I am hiring more people and doing it with a frozen budget.” OPM currently employs 130 specialists who process retirement claims and is hiring 56 more, in addition to customer service staff. Berry says getting new personnel fully up to speed on claims processing typically takes as long as a year.

OPM administers benefits for 2.5 million federal retirees and processes approximately 100,000 new claims annually.

Individual agencies are partly to blame for delays and other problems associated with processing retirement claims. Retirement information can be lost, wrong, or incomplete when it finally makes its way to OPM staff, who then have to fill in the holes and verify data. Sen. Mark Warner, D-Va., asked Berry to report regularly on the error rate of retirement data submitted by agencies to hold them more accountable for fixing the process.

The OPM chief said that his agency has processed nearly 20 percent more retirement claims this month compared to January 2011. Berry told the committee he will report each month on the status of the backlog to lawmakers.

Processing retirement claims, particularly disability claims, can be complex and time-consuming, and OPM relies heavily on federal agencies to provide it with retirees' information, including the amount of their annuity. The agency uses more than 500 different procedures, laws and regulations to process retirement applications.

Longstanding weaknesses in OPM’s IT management, including project management, have hindered the agency’s ability to sustain a successful claims processing system and get the backlog under control, said Valerie Melvin, director of information management and technology resources issues at the Government Accountability Office. GAO has made several recommendations over the years that OPM has agreed with but hasn’t properly executed, Melvin said.

“Despite OPM’s recognition of the need to improve the timeliness and accuracy of retirement processing, the agency has thus far been unsuccessful in several attempts to develop the capabilities it has long sought,” she said.

OPM’s inspector general expressed concern over the amount of improper payments OPM administers each year, including payments to deceased retirees.

“Over the past six years, we have watched as the agency has adopted new measures to combat these improper payments,” said Patrick McFarland. “However, these measures were not consistently pursued and the efforts eventually stalled.”

The rate of annual improper payments on average is more than $100 million per year. OPM to date has recovered $500 million in improper payments.

Federal pay and benefits increasingly have become the target of spending cuts from Republicans and Democrats. Earlier this week, the nonpartisan Congressional Budget Office released an analysis that concluded federal workers are better compensated, particularly with respect to benefits, than their private sector counterparts.

But waiting -- in some cases years -- for a full retirement check is hardly a benefit, some argue. Many retirees rely on their annuity to pay for mortgages, children's education and the basic necessities of life.

“The effect of such long delays on new federal retirees is obvious and serious -- they must ‘make do’ while waiting to receive the full amount they have earned,” said Joseph Beaudoin, president of the National Active and Retired Federal Employees Association. “The wait is too long, and the uncertainty is too much, particularly in the current economy.”

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