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Key developments in the world of federal employee benefits: health, pay, and much more.

Retirement Plan

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Many federal retirees have complained for some time about the government's inability to process their annuity payments promptly or accurately. I recently heard from a disabled Iraq war veteran who has been waiting seven months for the Office of Personnel Management to process his disability retirement payments.

The problem has proved intractable so far, and on Wednesday OPM unveiled its latest strategy to fix a process that had a backlog of nearly 50,000 claims at the end of 2011.

OPM's plan, sent to Congress this week, 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.

"Federal employees face unacceptable delays in receiving retirement benefits after years of honorable service to the nation," said the report's executive summary. That's an understatement. On average, its takes 156 days to process a claim, but many retirees have waited a lot longer than that. OPM plans 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 agency last year abandoned a large-scale IT modernization project designed to fully automate the system after it failed to produce results.

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. But as OPM admits, the current delays are unacceptable. Here's hoping this latest strategy is a success. Many retirees rely on their annuity to pay for mortgages, children's education and the basic necessities of life.

Debt Limit and the G Fund

The Treasury Department once again is suspending investments into federal employees' pensions until the debt limit is increased, pending congressional approval. Treasury Secretary Timothy Geithner alerted Congress and the Federal Retirement Thrift Investment Board of the temporary measure. Federal employees won't be affected by the move.

The law allows the government to take extraordinary measures to avoid a default, including tapping into and suspending investments into the Civil Service Retirement and Disability Fund and halting the daily reinvestment of the government securities (G) fund, the most stable offering in the Thrift Savings Plan's portfolio. The G Fund is invested in interest-bearing Treasury securities -- bonds -- that make up the public debt. The Civil Service Retirement Fund finances benefit payments under the Civil Service Retirement System and the basic retirement annuity of the Federal Employees' Retirement System, and those investments are made up of securities also considered part of the public debt. Federal law (Sections 8348 and 8438 of U.S. Code Title 5) requires the Treasury secretary to refill the coffers of the G Fund and the Civil Service Retirement Fund once the issue of the debt ceiling is resolved, and in addition, to make up for any interest lost on those investments during the suspension.

In May, Treasury suspended investments into federal employees' retirement plans, as the government officially hit its debt ceiling of $14.3 trillion, until Congress agreed to increase the limit in August before it defaulted. Treasury paid roughly $378 million in interest on the G Fund from May 16 through Aug. 2, when President Obama signed the 2011 Budget Control Act into law, raising the debt ceiling to its current level of $15.2 trillion.

 

Kellie Lunney covers federal pay and benefits issues, the budget process and financial management. After starting her career in journalism at Government Executive in 2000, she returned in 2008 after four years at sister publication National Journal writing profiles of influential Washingtonians. In 2006, she received a fellowship at the Ohio State University through the Kiplinger Public Affairs in Journalism program, where she worked on a project that looked at rebuilding affordable housing in Mississippi after Hurricane Katrina. She has appeared on C-SPAN’s Washington Journal, NPR and Feature Story News, where she participated in a weekly radio roundtable on the 2008 presidential campaign. In the late 1990s, she worked at the Housing and Urban Development Department as a career employee. She is a graduate of Colgate University.

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