About That Backlog…

As most federal employees have heard, especially those who are near retirement, there’s a substantial backlog of retirement claims at the Office of Personnel Management that haven’t been fully processed and are awaiting review. As of the end of March, the backlog stood at 36,603 claims. That’s a lot less than the 61,108 that were backed up in January 2012, but if you’re a recent retiree (or planning to retire soon) it’s still not a very comforting number.

To compound the problem, there have been many more retirements so far in 2013 than anticipated. For example, OPM expected to receive around 21,000 retirements in January, since many employees take advantage of retiring at the end of the leave year to maximize the payout of unused annual leave.

This year, retirement claims submitted in January numbered 22,187. Usually after the initial flurry of end-of-year retirements, things die down for a few months. In February, OPM expected to receive only 5,600 new claims, but they received 20,374. That is almost four times the number of projected retirements. And again in March, the projection was for a moderate amount of new retirement applications -- about 5,000 new claims. But would-be retirees submitted more than twice that number -- a total of 10,183 new claims.

What is happening here?

Is this the long awaited “retirement tsunami” that former OPM Director Linda Springer predicted during the Bush administration, based on the fact that so many federal employees began reaching retirement eligibility at the same time? Or is this the effect of sequestration and furloughs? Or is it possible we’re seeing large numbers of people decide that if they don’t retire now, their benefits will be cut by Congress and the Obama administration?

I think it’s a combination of all of these factors -- and more. For example, the Postal Service is in the midst of a major downsizing effort, which is likely to accelerate in the months and years ahead. And other agencies are offering early retirements and  buyouts.

The good news is that OPM has put many efficiency improvements into effect and has hired additional personnel that have helped increase the number of claims processed. The agency is now able to process 10,000 to 15,000 claims every month, preventing the backlog from ballooning even higher. OPM has also been communicating with agencies in order to reduce the number of applications that are submitted with errors or missing documentation. OPM should be applauded for making significant strides in this area.

Still, despite all the progress OPM has made, the agency is fighting an uphill battle, and faces an ongoing challenge. After all, OPM already administers benefits for 2.5 million federal retirees and even in an ordinary year processes more than 100,000 new claims.

The problem is that retirement processing remains a paper-based, human-touch system. It hasn’t been fully automated due to complexities in the rules governing retirement benefits and the way records have traditionally been maintained prior to electronic record-keeping. Until those issues are resolved, would-be retirees are likely to face long waits before their applications make it through the process.