OPM to provide employees more retirement planning information

The Office of Personnel Management next year will expand its retirement education program for federal employees.

The expansion comes in response to a 2004 law requiring the government to develop a new strategy for boosting retirement financial literacy among its employees. OPM submitted its plan to Congress over the summer and published it on the Web Tuesday.

The personnel agency plans to offer a Retirement Readiness Index Profile by April 1, 2006. The electronic, age-based profile will give employees benchmarks for financial and personal readiness and will let them compare themselves to their peers.

The profile will enable civil servants to identify weaknesses in their retirement preparedness. For example, a 30-year-old should understand the difference between stocks, bonds and mutual funds, but need not necessarily know how to budget for retirement, OPM said. A 60-year-old should comprehend both.

OPM also plans to offer a comprehensive resource guide by July 1. The guide will link to educational materials that can be used to fill gaps in preparedness.

The agency also will begin offering a simple, one-page worksheet that employees can use to calculate how much money they will need to fund their retirement. It will take Thrift Savings Plan accounts, Social Security benefits and pension projections into account.

The worksheet will be similar to the Ballpark Estimate from the American Savings Education Council, but will take unique federal programs into account. This feature also will be available to employees by April 1, according to OPM.

Benefits officers will attend educational workshops run by OPM on programs such as health and life insurance, long-term care insurance and flexible spending accounts. The workshops will be one-hour lunchtime events, and benefits officers will receive presentation slides and handout materials to distribute to employees.

The benefits officers also will attend an annual symposium reviewing the government's retirement programs.

The additional education is needed, especially for employees under the newer Federal Employees Retirement System, which relies on Thrift Savings Plan investments for a significant portion of retirement income, said Kenneth Glass, director of government affairs for the National Active and Retired Federal Employees Association.

"I would say that there is a huge gap right now because people don't really understand necessarily what they're doing," Glass said. "With FERS employees [and] the TSP, how they distribute that is supposed to make up roughly a third of their retirement income, so the more they understand it in advance, the better off they are in the long run."

Despite its stepped-up efforts, OPM said the onus is still primarily on agencies to provide adequate retirement education to workers. Agencies will be required to report to OPM on their outreach efforts.

Today, retirement education generally comes in the form of pre-retirement seminars paid for by agencies but contracted out to private companies. OPM called these seminars "too little, too late."

The expanded offerings are part of OPM's response to the Thrift Savings Plan Open Elections Act, which eliminated open seasons for TSP investments and required the government to improve retirement education.

Many of the enhancements are based on the national strategy developed by the Financial Literacy and Education Commission, which is chaired by the Treasury Department secretary and has representatives from numerous agencies.