Sequester, Postal Departures Weigh on Retirement Claims Backlog

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Sequestration cuts and a dramatic uptick in U.S. Postal Service departures have slowed progress in clearing the backlog of federal retirement claims, officials said at a congressional hearing Thursday.

Ken Zawodny, associate director for retirement services at the Office of Personnel Management, said the across-the-board spending cuts have forced a ban on overtime for employees in his office. Overtime has played a critical role in reducing the backlog, Zawodny said.

Additionally, an unexpected number of Postal Service employees have retired due to buyouts and other attrition tactics to reduce the USPS workforce. These retirements have added to the burden for OPM workers.

OPM had previously set the goal of processing 90 percent of all retirement claims within 60 days by July 2013, an objective Zawodny no longer expects to reach.

“I still think we will get very close,” Zawodny told the panel.

Lawmakers on the House oversight panel also voiced concerns over the amount spent on improper payments, such as pensions distributed to individuals fraudulently collecting for a deceased annuitant.

OPM doles out more than $100 million in improper payments annually, according to Patrick McFarland, the agency’s inspector general. Zawodny said OPM has made significant strides in reducing the fraudulent disbursements through “concerted efforts in that area,” and the agency has a 72 percent recovery rate of those funds.

“As a watchdog, I appreciate you doing that,” said subcommittee Chairman Rep. Blake Farenthold, R-Texas. “But I still have some concerns.”

Another point of contention concerned OPM’s effort to digitize and automate claims processing. George Kettner, president of Economic Systems Inc. -- which provides software for OPM’s retirement center -- said agencies currently take the unnecessary step of printing and sending a physical copy of a departing employee’s information to OPM, rather than sending it digitally.

“I grew up in the turbo tax era,” Farenthold said. “You click a few buttons and it spits out a form. What do you do that takes so long?”

The Government Accountability Office issued a report in conjunction with the hearing, finding that previous modernization efforts “hindered by weaknesses in key management practices.” Several previous efforts to overhaul the processing system were abandoned by OPM due to poor planning and cost estimating, GAO’s Valerie Melvin testified.

The effort to reduce the backlog may have led to sloppier work from OPM employees, McFarland suggested in prepared testimony. OPM strives for 95 percent accuracy in its retirement payments but only reached 90.6 percent in the first quarter of fiscal 2013. 

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