The Great Claims Processing Pileup

By Tammy Flanagan

May 17, 2013

Last week, the House Subcommittee on Federal Workforce, Postal Service and the Census met to hear testimony on the following question: "Is the Office of Personnel Management Processing Federal Worker Pension Claims on Time?" Last month, I addressed the issue of the retirement backlog in a column. Dozens of people posted comments afterwards, many of them recent federal retirees who indicated OPM is indeed making progress in reducing the backlog of claims and processing retirement applications in a timely manner.

At the hearing, Ken Zawodny, associate director of OPM for retirement services, testified that this year, the processing time for the average retirement case is less than 90 days, down from 136 days in 2012.

But OPM is clearly concerned about maintaining progress in reducing that even further. This year’s budget sequester has caused the agency to eliminate overtime for claims processors. At the same time, ongoing efforts to cut the postal workforce have added more retirement applications to the pile.

From January through April 2013, OPM received more than 60,000 new retirement applications -- 43 percent more than during the same period in 2012, and 44 percent more than projected. Still, the efforts of OPM employees resulted in a record number of claims being processed.

One problem that OPM faces is that certain types of applications -- particularly those involving disability claims and court orders -- take more time to process and bring down the overall average. That’s because multiple parties are involved in processing them, Zawodny said at the hearing. Disability claims require a medical review process. Cases involving court orders, such as benefits that must be awarded to an employee’s former spouse, must undergo legal review. OPM has hired more legal administrative specialists and paralegals to address backlog of court-order cases.

Earlier this month, I got an email from a former employee of the Federal Aviation Administration, who retired on Sept. 3, 2012, and is still waiting for the final processing of his retirement. Here’s what he had to say:

I knew of the OPM backlog in processing retirement applications and receiving your full annuity. I planned for it by doing the following: 1. Submitting the maximum to my Thrift Savings Plan accounts. 2. Saving about $40,000 additional to "tide me over." 3. Planned for an eight-month wait period to receive my full annuity. My ex-wife will be receiving about 20% of my annuity by court order. I don't begrudge her this share, and did submit the court order with the prescribed formula contained therein as to how her share would be computed. To date, the only communication I have had with OPM is what I initiated. I did call OPM yesterday to ask when my retirement package would be completed. They indicated to me that because of the court order, I should plan for an additional two to three months.

I don't think my situation is all that unusual, but I do think it is somewhat ridiculous to have to save for nearly a year of transitional income. Moreover, the situation is compounded by the fact that I am only receiving 45% of what I believe will likely be my share of the retirement annuity.

Most recent retirees receive interim benefits that are much closer to their final annuity amount, but since OPM is not sure how much this employee’s ex-wife is entitled to, it errs on the conservative side. This means that when the retiree’s claim is finalized, if OPM determines that his ex-wife is only due 20 percent of his retirement, the government will owe him the difference. But he won’t receive any interest on the back payments.

Sacrificing Quality for Speed

Another issue addressed at the hearing is whether OPM is compromising the accuracy of retirement claims processing in the name of speed -- specifically by eliminating some of the steps previously taken. In fiscal 2012, OPM finalized about 112,000 retirement claims. More than 10,000 of them required re-adjudication due to errors. This creates hardships for annuitants and their families.

That’s why one of my goals is to help you understand what you are entitled to before you retire, so you’ll know what to expect once your claim is finalized. The calculation of your retirement is not that hard as long as you understand the key elements used in the computation: your salary, length of service and the formula used by the retirement system you have worked under.

If you’re not sure where to start, ask your agency’s retirement specialist about getting an estimate of your benefit. If you don’t know who that person is, here’s a list of retirement specialists at various agencies.


By Tammy Flanagan

May 17, 2013

http://www.govexec.com/pay-benefits/retirement-planning/2013/05/great-claims-processing-pileup/63219/