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Trying to Retire During the Shutdown

A story of delays and complications.

In January, the Office of Personnel Management received 13,264 retirement claims, down from 14,590 in January 2018. In February, OPM received a little less than 11,000 claims, almost 2,500 fewer than the same month the year before. But then in March, when the partial government shutdown ended, more than 10,000 claims were filed, 23% more than in March 2018.

So it appears that the shutdown furloughs had a pretty substantial effect on agencies’ efforts to process claims before sending them to OPM. I recently heard from a recent retiree who has personal experience with this situation. I thought their story was worth sharing in full:

I retired Dec. 31, as planned, and while on furlough. I was informed that my payroll office was notified of my separation, and in January there was a note on the Employee Personal Page of the payroll site that I had 90 days access to my payroll information following my separation. But then, crickets. It appears that while the payroll folks were not furloughed, the human resource specialists were, so when they got back to work after the furlough, they had a bit of a backlog to work through.

In mid-February, I contacted OPM and finally got through to learn they did not have anything from my agency to indicate that I had recently retired. (All this time, the news was covering current employees’ concerns with missed paychecks. Folks need to be prepared for the first few months of retirement!) My annual leave payout hit the bank on Feb. 25, about eight weeks after my retirement date. Although it was a good chunk of money, about half went to taxes. Due to the furlough, my last paycheck was delayed and had to be manually processed. That hit my bank on March 1. The Thrift Savings Plan did not receive the biweekly contribution from the last check right away. But when they did, they adjusted the earnings in the accounts to reflect as if the deposit occurred on time (Jan. 14). That was a positive effect, and unexpected.

Mid-March is when I received a letter from payroll notifying me that my information and retirement application package had been sent to OPM on March 8. OPM jumped right on it and I got my first interim payment on Tuesday, March 12. It covered the first two months, January and February. I received a letter from OPM outlining what's to come and describing the interim payment (gross, federal taxes, net). The first payment, for two months, had tax withholding that was almost five times the withholding for the March payment that I received on April 1. (This month’s gross CSRS payment was $6,114 with federal tax withholding of $415. The first interim payment, covering January and February retirement, had tax withholding over $2,400.)

OPM says, “We only withhold Federal income tax. You may find that the Federal income taxes withheld from your first interim payment will be higher than the Federal tax withholdings from your subsequent interim payments and regular annuity. We will make any necessary tax withholding adjustment when we finish processing your application. Your health and life insurance coverage will continue while you are receiving interim pay. We will begin withholding health and life insurance premiums retroactive to the commencing date of your annuity, when we finish processing your application.”

I also received the secure mailer with my temporary password to the OPM Services Online site when I received my first interim payment. I got that all set up and I'm guessing that more options will open on the site once the final payment is calculated. (I wasn't able to see deductions, allotments or state taxes just yet.) I figure it will be a few months until everything straightens out. When I checked the status of my claim on the OPM site, my claim has not been assigned to a specialist yet.

I'm sure my experience is not unique, but the timing was certainly special. One takeaway for others is the need for a rainy day fund. Not just for emergencies, but also for planned situations, like retirement!