A government watchdog agency warned last month that although incidents of improper payments from a federal retirees’ defined benefit program remain low, the risk that the Office of Personnel Management could overpay some retirees is “high.”
In its annual report on management challenges facing the agency, the OPM Office of the Inspector General said that OPM needs to shore up reporting requirements and oversight of the Civil Service Retirement System and the Federal Employees Retirement System.
The overall rate of improper payments from CSRS and FERS in fiscal 2017 was 0.38 percent, far below many other federal programs. But that amounted to $313.8 million, of which $238.7 million were overpayments. Underpayments totaled $75.1 million, or 0.09 percent of transactions.
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The inspector general said that although OPM is committed to further curbing improper payments, it lacks the capability to do so at this time.
“OPM’s Retirement Services office is aware of the major contributing factors to these improper payments; however, it is unable to provide the level of granularity needed to fulfill [Office of Management and Budget] reporting requirements,” the inspector general wrote. “OPM’s systems were not designed or built to perform analysis of vast quantities of data.”
The agency has begun taking action to try to correct the issue, working on projects to review tax documents and other measures to reduce the risk of overpayments in fiscal 2018. But the inspector general argued a more holistic approach must be taken.
“We continue to believe that the process for conducting projects and reviews . . . and for reporting and following up on the results needs to be improved,” they wrote. “[We] conclude that Retirement Services lacks a comprehensive centralized tracking system to record and analyze its program integrity work, and lacks appropriate internal control procedures to timely detect, identify and report potential fraud, waste and abuse . . . Retirement Services should consider addressing these issues by establishing a dedicated program integrity office or unit whose sole objective is the detection and prevention of potential fraud, identifying program vulnerabilities, and finding the root causes of improper payments.”
Meanwhile, the Thrift Savings Plan last week announced that it would loosen rules surrounding hardship withdrawals to help federal workers and retirees impacted by hurricanes Michael and Florence.
Following up on guidance issued by the Internal Revenue Service last month, officials with the federal government’s 401(k)-style retirement savings program said that any TSP participants who apply for a hardship withdrawal from their accounts between now and March 5, 2019, will be approved, provided they write “Hurricane Michael” or “Hurricane Florence” at the top of the form.
Applicants should also ensure that they check the “personal casualty” box on the application form. The waiver of hardship withdrawal rules means that participants will not be prevented from making contributions to their TSP accounts for six months after taking the withdrawal and will still receive an employer match for those contributions.