Expert's View

OPM is on the hot seat for what Sen. Barbara Mikulski (D-Md.) called its scandalously wasteful and unacceptable processing of retirement applications. She based her comments on what she’d been hearing from her constituents, who complained that it took too long to calculate their benefits and that for months they either got smaller annuities than they were entitled to after they’d left or got bigger ones and were billed for the overpayments at a later date.


To better understand the problem, let’s first review the retirement application process. After you’ve filed your retirement application with your agency, your personnel office will have to certify your eligibility for FEGLI and FEHB coverage, forward any designations of beneficiaries, process the personnel actions needed to separate you from the service, complete and certify the personnel portion of your retirement application, and forward it to your payroll office.

Your payroll office will authorize your final salary payment and any lump-sum payment for unused annual leave. It will then certify and close out your Individual Retirement Record, which it can only do after your final salary check has been issued.   

Assuming that your agency’s personnel and payroll offices manage to get your paperwork to OPM within a month – an unlikely occurrence – OPM then has to go through a series of steps to adjudicate your claim.  And here they are:

1. At the Retirement Operations Center in Boyers, Pa., your application package will be merged with records it has from any other agency for which you worked and records documenting any deposits or redeposits you have made.

2. If your records are incomplete, it will need to go back to your most recent or previous agency (or agencies) to fill in the blanks.

3. Assuming a complete file, the center will authorize interim payments that equal about 85 percent of your regular payments, usually within 10 days after it receives the retirement package from your agency.

Let me pause here and ask the obvious question: Why doesn’t OPM automatically provide you your full annuity instead of an interim one? Because few retirement records are complete and straightforward. As a hedge against overpayments, interim payments were introduced so that retirees had some cash coming in while the case file continued on its way.

4. The Retirement Operations Center forwards the records in OPM’s retirement specialists in Washington for final adjudication.

5. If your file is pristine, your final annuity will be computed and any difference between what you should have received and what you actually got will be included in your first full annuity payment. On the other hand, if an overpayment was inadvertently made, you’ll receive a request for repayment.

6. It’s OPM’s hope that any fully documented claim can be adjudicated within 30 to 35 days from the date it first receives your retirement package.

So, what’s the problem? For one thing, the system is old, with most of the records still on paper. OPM’s director, John Berry, has promised to give modernization of the process a high priority. But then so has every director over the last 20 years. Time and again, major efforts to do that have failed, often because needed resources weren’t made available by OMB or the Congress. And even when they were for brief periods, the technical difficulties of automating millions of paper files have overcome even the best of intentions.

Then there are the myriad of laws that make what should be a straightforward computational process into a nightmare. The variations on what is considered creditable service fill chapter after chapter in the CSRS and FERS Handbook for Personnel and Payroll Offices. Some retirees get credit for certain kinds of service while others don’t. And the service of other retirees before x-date is treated differently than service on or after y-date. Add to that the inexcusable reduction in the number of agency and OPM personnel qualified to prepare the paperwork before it goes to OPM and you have the makings of a first class mess.

Can agencies and OPM do better than they do now? Yes. Will they be able to do it soon? Not unless adequate resources are made available. Even then…