Reg Jones Expert's View

Just when I thought there was nothing new under the sun, I got a copy of a letter that OPM sent to all departments and agencies. Here it is.

"The purpose of this letter is to notify you of the new statutory requirement for employing agencies to remit to the Civil Service Retirement and Disability Fund (CSRDF) an amount equal to the Fiscal Year (FY) 2011 average unit cost of processing annuity cases if, any time during FY 2012 (retroactively to October 1, 2011) an employee retires under a CSRS or FERS Voluntary Early Retirement Authority (VERA), or any other CSRS or FERS provision and receives a Voluntary Separation Incentive Payment (VSIP), or other form of monetary separation incentive (i.e., any form of buyout). The average unit cost of processing annuity cases under this requirement is calculated to be $107.62 per annuitant.

"This new statutory requirement arose from Section 741 of Division C of the "Consolidated Appropriations Act, 2012," Public Law 112-74, approved December 23, 2011. It contains the following:

"SEC. 741. During fiscal year 2012, for each employee who

"(1) retires under section 8336(d)(2) or 8414(b)(l)(B) of title 5, United States Code, or "(2) retires under any other provision of sub-chapter III of chapter 83 or chapter 84 of such title 5 and receives a payment as an incentive to separate, the separating agency shall remit to the Civil Service Retirement and Disability Fund an amount equal to the Office of Personnel Management’s average unit cost of processing a retirement claim for the preceding fiscal year. Such amounts shall be available until expended to the Office of Personnel Management and shall be deemed to be an administrative expense under section 8348(a)(l)(B) of title 5, United States Code."

Why does OPM need to charge agencies to carry out its statutory responsibility? And why does it only apply to VERAs and VSIPs?

According to OPM director John Berry, OPM had not been filling benefit specialist jobs that were vacated when employees retired because it expected to need fewer employees when a new automated retirement processing system came on line. When that system flopped, they were understaffed to handle the existing workload, not to mention the increase generated by agencies offering VERAs and VSIPs, a major source of retirement applications these days.

Berry said the U.S. Postal Service provided the impetus to seek legislation. Anticipating a serious backup affecting its retiring employees, the Postal Service worked with OPM to craft legislation that would allow OPM to secure the needed funds to beef up staffing outside the appropriations cycle.

With an influx of cash, OPM is hoping to turn around a process that has caused widespread dissatisfaction all around for years. However, in the short run, while newly retired employees can expect to be put in interim pay status more quickly than before (and at a higher percentage level), they will still have to wait longer than they should for their cases to be finalized.

While acknowledging OPM’s central role in the retirement processing backlog, Berry pointed out that an unacceptably large number of retirement applications it receives from agency have been incomplete, requiring a lot of back and forth before a case can be processed. OPM is currently working with agencies to solve this problem.

I’ll have more to say about how OPM is planning to dig out from under next week.