Federal Retirement: OPM Actions Needed to Improve Application Processing Times
Released: 2019-06-14T00:00:00

Letter

Background

OPM administers two defined-benefit retirement plans that provide retirement, disability, and survivor benefits to federal employees. The Civil Service Retirement System (CSRS) provides retirement benefits for most federal employees hired before 1984. The Federal Employees Retirement System (FERS) covers most employees hired in or after 1984, and provides benefits that include Social Security and a defined contribution system. If a federal employee becomes disabled while employed in a position subject to the retirement system, and the employee meets the disability eligibility requirements, the employee may apply for a disability retirement.

Agencies’ human resources offices, payroll offices, and OPM are responsible for compiling and processing federal employees’ retirement applications. The process begins when an employee submits a paper retirement application to his or her agency’s human resources office. OPM’s guidance states that both agencies and payroll offices must certify that specific portions of the application are accurate.

OPM employees then ensure that the package includes all the necessary information. An OPM adjudicator processes the retirement package, which contains the application documents from human resources and payroll. For example, the package includes the separation form, which finalizes the date that the employee will retire. The adjudicator determines if the eligibility requirements are met for an annuity as well as health and life insurance into retirement, and calculates the annuity. The process is completed when the individual begins receiving regular monthly benefit payments, as illustrated in figure 1. According to OPM officials, OPM then stores the paper retirement file until (1) all benefits have been applied for and paid to all eligible heirs, and (2) a specified amount of time has passed.

Over several decades, OPM has attempted to modernize the retirement application process by automating paper-based functions and replacing antiquated information systems. However, as we have highlighted in our past work, the agency has experienced numerous challenges and has a history of undertaking modernization projects that did not yield the intended outcomes. Specifically, we found that OPM’s efforts over 2 decades to modernize its processing of federal employee retirement applications were fraught with (information technology) IT management weaknesses. In 2005, we made recommendations to address weaknesses in project, risk, and organizational change management. In 2008, as OPM was on the verge of deploying an automated retirement processing system, we reported deficiencies in, and made recommendations to address, additional weaknesses in system testing, cost estimating, and progress reporting. In 2009, we reported that OPM continued to have deficiencies and made recommendations to address these and other weaknesses in the planning and oversight of the agency’s modernization effort. OPM began to address these recommendations; however, in February 2011, it terminated the modernization effort.

As figure 2 shows, 31.6 percent of federal employees who were on board as of September 30, 2017, will be eligible to retire in the next 5 years. Some agencies have particularly high levels of employees eligible to retire in the next 5 years.

OPM’s reporting on its application processing timeliness also shows longer processing times or occasional improved processing times that were not sustained from fiscal year 2006 to 2017. We found it difficult to compare OPM’s performance across years because the performance measures have changed over time. For example, in 2009 through 2011, OPM’s performance measure was the average number of days to process applications. During this time period, OPM met its target except for 1 year when OPM reported 108 days and the target was 45 days. In contrast, in 2014 through 2017, OPM’s performance measure was the percentage of applications processed in 60 days. During this time period, OPM did not meets its target of processing 90 percent of applications in 60 days as the percentage ranged from 57 to 79 percent each fiscal year.

OPM Attributes Processing Delays to Paper-Based Applications, Staffing, and Missing Information in Applications

Paper-based applications. Despite past attempts to modernize its retirement applications processing operation, OPM currently requires federal employees to submit their retirement application on paper. According to OPM officials, OPM has automated some front-end processing steps, despite various challenges, such as OPM’s and agencies’ legacy systems lacking functionality or integration, inaccurate data due to manual data-entry errors, and lack of real-time data because data are stored in inconsistent formats at multiple locations. OPM officials reported that payroll providers can electronically send OPM 59 data elements, which allows OPM to authorize interim annuity payments to 50 percent of new applicants, as well as initiates other processing functions. However, as shown in figure 3, subsequent processing steps still require manual intervention, including assembling paper documents into folders, ensuring documents are in proper order, and addressing missing or incomplete information.

Staffing capacity. OPM attributed delays to not having enough staff to address its peak workload season, called the surge period. According to OPM, it hired additional staff in 2017 and 2018 to process applications throughout the year, but overtime pay was needed to increase staffing capacity during surge periods. Also, officials reported that hiring freezes, continuing resolutions, and other budget constraints affected hiring numbers and created hiring delays over the past 5 fiscal years.

During the surge, OPM officials said they receive the bulk of applications starting in mid-January continuing through February (6 weeks). However, the effect of the surge workload lasts until mid-April because OPM takes about 60 days on average to process an application. Figure 4 illustrates the flow of applications OPM received and processed in fiscal years 2016 to 2018. During the months of January and February in this time period, OPM received an average of about 13,200 applications per month, a considerable increase over its average of about 7,200 per month at other times of the year. Despite the increase in applications, OPM’s application processing numbers remained essentially the same in January and February (8,200 per month) compared to other months of the year (8,100 per month), thus increasing OPM’s inventory of unprocessed applications, which ranged from approximately 11,400 to 24,200 for the time period shown.

The increase in inventory was partly mitigated in March of each year, when OPM processed an average of about 11,000 applications. OPM officials reported that they processed more applications in March because they used overtime pay and flexible staffing across work units, such as temporarily shifting staff to a different unit to expedite workflow; screened for complete applications; and received fewer applications as surge periods ended. We discuss these and other actions OPM has taken to increase staffing capacity during surge periods later in the report.

Incomplete applications. According to OPM officials, in up to 40 percent of applications, OPM is missing information needed to finalize processing, which increases processing time. Incomplete applications generally fall into two categories:

Missing information. OPM estimates about 10 percent of applications are missing information, such as a form or signature. For example, OPM officials said that documentation for the applicant’s preceding 5 years of health insurance coverage, which is necessary to continue health insurance into retirement, was often missing.

Waiting for applicant decisions. OPM estimates about 30 percent of applications are delayed while waiting for applicant decisions. For example, OPM stated that it must wait 30 days for the applicant to select an annuity option if deposits or redeposits are made.

In addition to these three root causes, OPM officials reported that other factors, such as legislative changes, can also cause processing delays. For example, changes in the law may require OPM to revise its processes and train its staff, taking away time from core processing activities.

OPM Conducts Limited Assessments of Its Processing Operation and Assistance to Agencies

IT Modernization Plan Remains Unclear

Subsequent to terminating its retirement modernization effort in February 2011, OPM refocused its retirement modernization efforts and in 2013 developed a new strategic vision for modernizing retirement applications processing. OPM’s 2013 strategic vision for modernizing retirement applications processing envisioned a paperless system that would timely authorize accurate retirement benefit payments, answer customers’ questions, and promote self-service account maintenance. According to OPM officials, the strategic vision consists of five key initiatives which are in varying stages of development and implementation, as shown in table 1.

Partly in response to cancelling its third attempt to automate the processing of federal retirement applications in February 2011, OPM is now taking an incremental approach towards modernizing its retirement IT systems. According to OPM officials, they also recognize the need to improve OPM’s enterprise architecture before implementing significant modernization efforts. As we have previously reported, these steps can help agencies successfully modernize and maintain IT environments.

OPM’s current approach provides a framework to help the agency achieve its overall IT modernization strategic vision. However, OPM officials provided no further explanation about how retirement IT modernization activities would proceed, such as describing proposed time frames and estimated cost ranges, even for initial project phases. Likewise, OPM’s Inspector General recently reported that the agency’s fiscal year 2018 IT modernization expenditure plan did not account for total costs nor identify the full scope of OPM’s modernization effort for the agency.

Industry best practices and IT project management principles stress the importance of sound planning for system modernization projects. These plans should identify key aspects of a project, such as scope, responsible organizations, costs, schedules, and risks. Additionally, planning should begin early in the project’s life cycle and be updated as the project progresses. Further, according to federal internal control standards, management should define objectives in specific and measurable terms, such as defining what is to be achieved, who is to achieve it, how it will be achieved, and time frames for achievement.

OPM officials said that additional IT modernization work is dependent on sufficient funding, support from the Office of the Chief Information Officer, and development of a technical enterprise architecture roadmap. These components are important. However, they do not preclude OPM from establishing a basic project management plan that includes objectives, estimated cost ranges, and proposed time frames for its initial project phases. Without a plan that is consistent with IT project management principles, OPM is less able to articulate a path forward in measurable terms and assess performance towards achieving its objectives. Similarly, without an electronic application system, OPM is less able to automatically verify information upfront when the application is submitted and notify applicants of any discrepancies prior to accepting the application.

The administration’s proposal to move the retirement application processing operation to the General Services Administration (to be renamed as the Government Services Agency) has created additional uncertainty for OPM. Potential changes in organizational affiliation, policy, budget, and staff may make it difficult for OPM to plan for large- scale changes in its operations. Nevertheless, continuing to develop plans to modernize retirement IT systems seems prudent, given that the details of the reorganization are still unknown and that the move to the General Services Administration may not occur in the near term, or at all. Further, IT modernization is a key theme in the March 2018 President’s Management Agenda and will likely be a key driver in changing agency operations for years to come.

OPM Lacks Performance Information That Could Improve Processing Timeliness and Staffing Capacity

We have previously reported that to successfully implement reforms and improve their operations and results, agencies need to robustly manage their performance. This involves not only measuring progress toward goals, but also using performance information (i.e., data collected to measure progress towards agency goals) to identify and correct problems, improve program implementation, and make other important management and resource allocation decisions. However, we found that OPM does not use performance information on processing timeliness to manage for results. In addition, we found that OPM conducted limited assessments of its processing data and did not assess the effectiveness of its staffing actions.

Performance Goals and Measures

OPM’s fiscal year 2019 processing timeliness goal is to process all retirement applications in an average of 60 days or less. The related performance measure is the average number of days to process retirement applications. However, we found that OPM did not use its timeliness performance measure to manage for results or provide external stakeholders and applicants a clearer picture of processing time.

Performance measures not used to manage. Based on our 2017 survey of federal managers, we found that OPM managers agency-wide reported a statistically significant decrease in using performance information to develop program strategy, allocate resources, and take corrective actions since 2013. Similarly, for this review, we found that OPM could enhance its use of performance information to manage for results in retirement applications processing. OPM has not established additional performance measures for the various parts of the application review and processing operation that would contribute towards achieving its overall processing timeliness goal. For example, OPM does not measure timeliness or have related performance goals for its various work units that process applications.

OPM officials do not use such performance goals and measures to manage for results in part because they do not perceive the information to be relevant to reducing processing delays. For example, OPM officials said that the new timeliness performance goal facilitates planning but does not improve processing time or otherwise provide better service to retirees. According to these officials, OPM does not have a requirement for completing its various processing steps within a certain amount of time because each application is different, and they do not want staff to rush and potentially make mistakes, thereby causing rework. In comparison, agencies and payroll centers that submit these applications to OPM are required to do so within a certain time frame.

Similarly, OPM has not established a timeliness performance goal or measure for completing its review of applicants’ eligibility for disability retirement. OPM officials said that OPM does not have a performance goal or measure for the review for disability retirement eligibility because it has not reached a steady processing level for these applications. However, OPM did not provide a time frame for when it expects to reach a steady processing level, nor did officials explain why OPM has not established performance goals and measures based on past performance or other benchmarks. In comparison, the Social Security Administration, through partnerships with state agencies, also reviews applications for disability benefits eligibility and has established performance goals for both the accuracy and processing time for this review process. As of November 2018, OPM officials reported that they are collecting data to develop a separate performance goal for measuring the timeliness of reviewing disability retirement eligibility and expect to establish a performance baseline within the next 3 to 6 months.

The lack of management practices to encourage and enhance the use of performance measures at the operational level can make it challenging for OPM to use performance information to manage operations, such as identifying problem areas that cause delays and implementing corrective actions, and to make decisions, such as better targeting limited resources based on risk or other priorities.

Unclear performance measures. OPM officials reported that the new processing timeliness goal also provides agencies and applicants a clearer, more realistic expectation of processing time. However, none of the four agencies we interviewed considered the new goal to be clearer or more helpful than past goals. The Departments of Defense and Health and Human Services, and the U.S. Postal Service were unaware that any such goal was ever established, prior to our discussions.

We found that this performance goal was unclear because it lacked explanatory information that would make it more meaningful for applicants and external stakeholders, such as agency benefit officers and congressional oversight committees. Specifically, the new performance goal and related measure are expressed as an average, which allows for potentially wide variation in processing times while still meeting OPM’s goal. In past work, we have reported that including explanatory information on goals and measures helps improve the usefulness of performance information. Without explanatory information, reporting an average can obscure aspects of OPM’s processing timeliness, such as the number and types of applications OPM processes faster or slower than 60 days and the range of processing times.

Also, OPM’s processing timeliness goal and measure do not include all phases of the application review process, specifically the time OPM takes to determine eligibility for disability retirements, which can be lengthy. We have previously reported that performance information could be more useful if it identified significant data limitations and their implications for assessing performance. OPM officials reported that the processing timeliness goal and measure exclude data on disability retirement applications pending approval because OPM does not consider reviewing disability retirement eligibility as part of processing. OPM includes disability applications in its processing timeliness goal after these applications have been approved. Not providing explanatory information about what the processing goal includes or excludes can lead to agencies’ and applicants’ false expectations and confusion about the amount of time OPM is taking to review applications.

Limited Assessments of Processing and Staffing Strategies

OPM has implemented various strategies for improving processing timeliness, as discussed below. However, we found multiple examples where OPM did not assess whether the strategies were effective.

Assessment of processing applications. According to OPM officials, senior and frontline managers review processing data, such as age of pending applications, weekly to identify potential concerns, and adjust staffing and workload if necessary. However, we found that OPM’s performance information may be of limited use for assessing processing delays because the data lacked elements that would provide a more complete measure of performance.

For example, we found that OPM did not review about half of applications government-wide for errors in fiscal years 2014 to 2016 combined, including all disability retirement applications. Likewise, OPM officials said that the number of unprocessed applications in inventory does not include disability retirement applications still pending approval. As a result, OPM’s performance information for both application errors and inventory does not reflect the full extent of processing delays because various applications have been excluded. OPM officials were unable to explain to us why or how they decided to exclude certain applications.

Also, OPM generally does not assess the accuracy of the data it collects on application errors. OPM most recently reviewed the accuracy of the error data in 2014, despite additional feedback from agencies that some errors charged to them were incorrect. We also found outliers in the data that OPM officials were unable to explain.

Assessment of staffing actions. OPM has taken actions to increase staffing capacity in retirement operations throughout the year, as well as during surge periods, as shown in table 2.

However, we also found that OPM does not assess the effectiveness of its staffing actions, even though OPM officials reported that they are consistently looking for opportunities to improve OPM’s current processes. For example, OPM officials said that staffing actions improved efficiency but were unable to provide supporting data or documentation of their assessments, such as how often cross-functionally trained staff worked in other units and resulting improvements in output or quality.

Likewise, OPM has not assessed the results of using overtime pay. As shown in table 3, any increased use of overtime pay during fiscal years 2013 to 2017 did not increase the number of applications processed.

OPM officials said that overtime pay does not necessarily translate into increased output because some actions performed during overtime, such as quality review, do not contribute towards finalizing additional applications. They added that other factors can decrease production, such as reduced staff. Reduced staffing from fiscal years 2013 and 2016 may have contributed to decreased output, even with the use of overtime. However, OPM officials were unable to provide the number or types of positions that were reduced. Likewise, OPM does not measure how and to what extent the various factors affect output.

OPM officials also said that they use overtime pay during surge periods to move applications through processing during its busiest time of the year, thereby decreasing an otherwise longer waiting time for applicants. However, OPM does not measure overtime productivity, or productivity in general, nor are they able to correlate overtime data with applications processing data or outcomes. OPM officials explained that they expect staff to be equally productive during overtime as they are during regular work time. Although OPM officials may set these productivity expectations, they do not collect productivity data to measure whether and to what extent staff meet these expectations.

Further, OPM officials could not provide basic staffing data, such as the number of staff who have processed retirement applications for the past 5 years or number of processing staff paid overtime. Such information is valuable because it provides the basis for assessing whether OPM’s staffing actions are improving performance and meeting their intended purpose.

We have previously reported that to be useful, performance information must meet users’ needs for completeness, accuracy, consistency, timeliness, validity, and ease of use. Other attributes that affect the usefulness of information include, but are not limited to, relevance, credibility, and accessibility. Further, federal internal control standards state that management should use quality information and design control activities to achieve the agency’s objectives. Examples of control activities include top-level reviews of performance compared to plans, goals, and objectives; management reviews at the functional or activity level; comparing and assessing related data sets so that relationships can be analyzed and appropriate actions taken; and clearly documenting control activities, transactions, and other significant events so that the documentation is readily available for examination. Federal internal control standards also state that management should implement control activities through policies.

OPM officials reported that OPM’s systems were not robust enough to produce better performance information beyond basic processing data. OPM officials added that they have limited resources to assess data on strategies intended to improve processing timeliness. As such, OPM could consider a risk-based approach to collecting data and conducting assessments. For example, OPM could prioritize assessments of more resource-intensive activities over less resource-intensive activities. OPM could also focus its assessments on situations that could potentially introduce processing errors or data inconsistencies, such as when regulatory or process changes are implemented, or when staff are newly employed or are taking on new responsibilities. OPM officials also said that processing time is one of multiple factors they use to determine the effectiveness of staffing actions. However, as noted earlier, processing times have not consistently improved, further underscoring the need for better data and assessments of strategies intended to improve processing timeliness. Lack of useful performance information and policies and procedures to conduct assessments can hinder managers from identifying causes and corrective actions to problems in existing programs, as well as developing and prioritizing strategies and related resources for future programs.

OPM Provides Assistance to Agencies, but Lacks a Robust Process for Assessing That Assistance

To obtain agencies’ perspectives on the retirement application process and better understand their coordination and collaboration with OPM, we interviewed four selected agencies using a standardized set of questions in a semi-structured interview format. After we met with the agencies, we discussed the agencies’ perspectives on OPM’s assistance with OPM officials and incorporated their comments, as appropriate.

Selected Agencies Have Mixed Perspectives on OPM Assistance

OPM provides four main types of assistance to agencies: written guidance, training, communication through assigned liaisons and email, and monthly error reports.

Guidance. OPM provides written guidance to agencies on submitting retirement applications through the Civil Service Retirement System and Federal Employees Retirement System Handbook for Personnel and Payroll Offices and Benefit Administration Letters. The letters provide guidance to agencies on various topics, such as on retirement policy and process issues. The most recent version of the handbook posted on OPM’s website is from 1998. OPM officials reported that the handbook is updated on an ongoing basis and as resources permit. Of the 47 chapters on OPM’s website, five had been updated between 2013 and 2017. NASA reported that OPM’s handbook is out of date and found it unreliable because some of the information is no longer accurate. All of the four selected agencies reported that the Benefit Administration Letters were very important. The Department of Defense (DOD), the Department of Health and Human Services (HHS), and the U.S. Postal Service (USPS) reported that the Benefit Administration Letters were issued at about the right frequency. In addition, DOD, the National Aeronautics and Space Administration (NASA), and USPS also stated that the Benefit Administration Letters were helpful or very helpful.

Training. OPM officials reported that OPM provides training opportunities to agencies which include semi-annual multi agency conferences, training for benefit officers, webcasts, self-paced online training, and onsite training if requested. DOD and HHS reported that they were satisfied with the training, and NASA and USPS reported that they were dissatisfied. For example, NASA reported that OPM’s training would be improved with more virtual trainings that are shorter. NASA also reported that cost constraints prohibited sending all retirement staff to in-person training while virtual training is accessible to more staff.

Liaisons and emails. OPM officials stated that it communicates with agencies by assigning all agencies a liaison to contact for technical assistance and communicating directly via email. For example, HHS reported that its previous liaison had helped locate missing records, such as a federal employee’s federal service history. All of the four selected agencies reported that the interaction with the liaisons was very important, and DOD, NASA, and USPS reported that the interactions were very helpful and about the right frequency. OPM also stated that it communicates with benefit officers and other interested parties through emails. USPS reported that the emails from OPM included Benefit Administration Letters and announcements about meetings and upcoming trainings. DOD, NASA, and USPS reported that emails were the most helpful form of communication with OPM.

Error reports. OPM provides agencies with a monthly error report after it analyzes each agency’s batch of applications. This report includes information on the type of error found and the volume of applications with the same error, according to OPM. The error report includes retirement applications for those who retired while working for the federal government, which, for example, does not include disability retirement applications, according to OPM officials. OPM officials reported that the intent of the error reports is to educate the agencies. DOD and USPS reported that the error reports were helpful for identifying application errors. However, all four selected agencies reported that aspects of the error reports were not user-friendly. For example, the error reports are in a format that cannot be manipulated, thereby requiring agencies to manually enter data to track the type of errors found, and analyze the data and share the information internally. Such manual entry increases the risk of data entry errors that could compromise the accuracy of the original data. The four selected agencies also reported that the error reports lack some types of information, such as clear descriptions of errors, data on trends, and information on disability retirement applications.

OPM Conducts Limited Reviews of Its Assistance to Agencies

OPM officials reported they review two of the four types of assistance (guidance and training) and also conducted a review of error reports in 2014. They also stated that they had taken some actions in response to agency feedback. However, OPM did not provide documentation of their assessments of guidance or training.

Guidance. OPM officials reported that they continue to evaluate their guidance and had taken some actions in response to agency feedback. For example, in response to agencies’ feedback that they experienced difficulty obtaining paper documentation of 5 years of health insurance, OPM officials reported that they developed a new form that agencies could use to certify that employees had the required coverage, which has resulted in decreased errors. However, OPM could not provide us with documentation of its reviews of its guidance. In addition, OPM had no schedule for updating guidance to agencies, according to OPM officials.

Training. OPM officials reported that they receive agency feedback on training in multiple ways and had taken some actions in response. For example, OPM officials said that agencies provide feedback on trainings informally during conversations with liaisons and at in-person trainings. OPM officials also said they read training evaluation forms, which include multiple choice questions on the value of the different aspects of the training and an area to write any comments or suggestions. In addition, OPM periodically surveys benefit officers on their training, including open-ended questions about how and on what topics the respondent would prefer to receive training. However, the benefit officer survey does not include broader questions about how the training or other types of assistance could better meet the needs of agencies.

In addition, OPM officials reported that in response to agency feedback, they made improvements to the class offerings, such as enhancing training on military discharges. OPM officials also reported that one of the actions they take in response to the most common errors that agencies make in retirement applications is to provide training on these topics. For example, OPM officials reported that they identified common errors on federal health benefits and military service documentation and subsequently provided training on both topics. OPM officials did not provide us with documentation of their reviews of agency feedback on training.

Error reports. In 2014, OPM conducted a review of the errors that 12 agencies disputed in the agencies’ error reports. OPM officials reported that the review concluded that less than 1 percent of OPM’s incorrectly identified errors would have affected the annuitant. According to OPM officials, the cost of reviewing and adjusting the error rate for accuracy outweighs the benefits. In addition, the four selected agencies reported that they had shared information with OPM on errors that the agencies thought were erroneously identified as errors. The four selected agencies reported that OPM had not changed the error rates in response. In addition, HHS and USPS reported that OPM did not share the information on disputed errors with its staff who audit the applications for errors. USPS officials also stated that OPM had not used this information to train its staff.

OPM’s fiscal year 2018 budget justification cited partnering with agencies to help them submit complete and accurate retirement packages for quicker processing. While OPM officials reported that they have reviewed certain types of assistance, they have limited or no documentation on the analysis or the results of these reviews. Federal internal control standards state that management should compare actual performance to expected results and evaluate and document monitoring results. The standards also state that management should complete and document corrective actions to remediate control deficiencies in a timely manner. In relation to training, which is one of the types of assistance OPM provides to agencies, we have also reported that a leading training investment practice is to evaluate the benefits achieved through training, such as having a formal process for evaluating improvement in performance and tracking the impact of training on the agency’s performance goals. Another leading practice is to compare the merits of different delivery mechanisms (such as classroom or computer-based training) and determine what mix of mechanisms to use to ensure efficient and cost-effective delivery.

OPM officials reported that effectiveness of their assistance to agencies is a contributing factor to decreased errors in retirement applications. For example, according to OPM, the percentage of complete applications submitted government-wide improved from 77 percent in fiscal year 2010 to about 92 percent in fiscal year 2017. OPM officials also noted that they assessed the effectiveness of their guidance and trainings and any modifications by observing if particular types of errors decrease overall.

OPM officials provided us a list of the most common errors for fiscal year 2017, such as a missing marriage certificate.

Although OPM officials have stated that they review two of the four types of assistance (guidance and training), OPM lacks a robust process for assessing and documenting its analysis and findings regarding all forms of the assistance it provides to agencies. This makes it more difficult for OPM to clearly demonstrate the effectiveness of its assistance. Thus, for example, there is limited understanding as to whether OPM’s training is being delivered through the most efficient and cost-effective mix of mechanisms. OPM may be missing opportunities to better partner with agencies by tailoring its assistance to help agencies improve their own processes and training. Assessments that result in enhancing OPM’s assistance to agencies could improve the completeness of applications submitted, which could in turn improve OPM’s application processing time.

With respect to the agency error report, federal internal control standards state that management should communicate quality information externally so that external parties can help the entity achieve its objectives, and periodically evaluate its methods of communication so that it communicates quality information. OPM officials reported that the current structure of the agency error reports was designed to capture the large overarching error-based issues many agencies face, such as applicants electing more life insurance coverage than permitted. OPM officials reported that they have not solicited input from agencies about the usefulness of the monthly error reports, but agencies regularly provide feedback to their OPM liaisons. OPM officials reported that they are evaluating the trends in the feedback. However, revising the structure of the current error reports would not be cost-effective, according to OPM officials. They also reported that they are considering including disability applications in future error reports.

The current format of the agency error report may limit its usefulness to agencies in improving their retirement applications and educating staff on how to address or minimize errors. Without user-friendly error reports, such as one that could be manipulated in Excel, agencies could find it more challenging to efficiently share the data among agency divisions and for the divisions to further sort the data. This challenge may be particularly burdensome at agencies comprised of numerous sub- agencies that share responsibility for preparing higher volumes of retirement applications.

Selected Agencies Have Developed Strategies for Compiling Accurate Applications

We found that the four selected agencies we interviewed used three strategies to compile accurate retirement applications, as shown in figure 5 below. Some agencies also had additional strategies, such as tracking identified issues in applicant’s retirement applications.

Preparing employees for retirement. The four selected agencies provide retirement counseling and had an agenda or a checklist to guide the discussion. Some of the topics included designating beneficiaries and eligibility to continue health insurance into retirement. DOD, HHS, USPS, and NASA also reported providing additional assistance to prepare employees for retirement. DOD’s website had calculators that could be used for estimating a Thrift Savings Plan annuity and survivor benefits. HHS stated that its employees have access to online pre-retirement seminars and financial planning resources. In addition, USPS has an employee retirement kit for that includes health insurance information, general retirement information, and retirement forms, such as for documenting life insurance and retirement effective date.

NASA also prepares employees for retirement in two additional ways. First, NASA reviews new employees’ electronic Official Personnel Folders, which contain their federal employment history, and makes corrections as needed. NASA officials stated it tries to resolve any issues in an employee’s electronic Official Personnel Folder rather than waiting until an employee retires. Samples of these files are then audited. Second, NASA stated that it encourages employees to ask for an annuity estimate every year for the 7 years prior to planned retirement. NASA reported that each annuity estimate generated includes a review of an employee’s files, and enables the agency to identify and address any errors.

Educating and training staff that compile retirement applications. The four selected agencies hold periodic staff meetings that include discussions of retirement applications. For example, NASA’s meeting includes a discussion of common errors to avoid, unique or complex retirement cases, process improvements, and lessons learned. The four selected agencies also conduct retirement application training. For example, DOD provided a multiday training that included topics such as creditable service, annuity computation, and retirement eligibility. HHS also stated that it partnered with its payroll provider to present the payroll side of retirement processing, including retirement application processing and disability retirement processing. DOD, HHS, NASA, and USPS also reported that new staff is mentored by experienced staff.

Procedures for compiling applications. The four selected agencies have procedures for compiling applications. For example, the four selected agencies have checklists to help staff compile the required documents. DOD’s checklist includes a list of more than 30 documents in sequential order with instructions on which documents to include for each of the two retirement plans. In addition, the four selected agencies reported having a system to track the process of compiling applications. DOD’s, NASA’s, and USPS’ respective systems also include tracking identified issues. For example, USPS’ system monitors the overall progress of each application, as well as tracks the status of each identified issue, such as missing documents, and whether the issue had been resolved.

The four selected agencies also conduct audits on some or all of the applications before submitting applications to OPM. The agencies reported that the audits are used to increase accuracy of submitted applications and provide feedback to staff on any identified errors. For example, DOD has an audit checklist with more than 30 items to review, such as whether a marriage certificate is included if applicable and if the application is signed.

Conclusions

Delays in processing retirement applications for federal employees have been a longstanding problem. According to OPM, it has identified root causes for the delays and has developed and implemented strategies to improve its processing operation. For example, the agency has developed a strategic vision for modernizing the current paper-based application, and employed strategies to address staffing capacity and minimize the number of incomplete applications. However, without improving its data collection and assessments of its strategies, OPM cannot know whether its strategies are effective at reducing the delays, or could be modified to yield better results. Furthermore, OPM’s plan for modernizing its information technology (IT) retirement processing lacks cost estimates and timelines, which means there are no measurable results with which to evaluate resource needs or interim progress.

In addition, although OPM has established a performance goal on processing timeliness, its related performance measure does not include explanatory information that could make it more meaningful. OPM also has not set performance measures for various parts of the application review and processing operation that could provide clearer insights into where improvements may be needed. Lack of quality performance information hinders applicants and external stakeholders from understanding OPM’s timeliness in processing applications, and limits OPM from better managing and monitoring program performance. Furthermore, OPM lacks a robust process for assessing its assistance to agencies, which makes it difficult for OPM to demonstrate the effectiveness of its assistance.

Potential organizational changes and other external factors have created additional uncertainty for OPM. These challenges notwithstanding, approximately 100,000 federal employees depend on OPM each year to process retirement benefits, such as life and health insurance, in a timely manner. As such, OPM should endeavor to reduce processing delays, monitor and report on its progress through better performance information, and effectively partner across the federal government to improve processing timeliness.

Recommendations for Executive Action

We are making the following six recommendations to OPM: The Associate Director of OPM’s Retirement Services, working in coordination with the Chief Information Officer, should develop, document, and implement a Retirement Services IT modernization plan for initial project phases that is consistent with key aspects of IT project management, such as determining objectives, costs, and time frames for each initial phase. (Recommendation 1)

The Associate Director of OPM’s Retirement Services should adopt management practices to enhance the use of performance information on processing timeliness to inform how OPM manages operations, identifies problem areas, and allocates resources. For example, OPM could enhance use of performance measures at the operational level or establish a timeliness performance goal for reviewing disability retirement eligibility. (Recommendation 2)

The Associate Director of OPM’s Retirement Services should provide explanatory information, such as the range of processing times and the exclusion of disability retirement eligibility determinations, as part of the performance measure on processing timeliness. (Recommendation 3)

The Associate Director of OPM’s Retirement Services should develop and implement policies and procedures for assessing strategies intended to improve processing times, including collecting and improving data needed to support those strategies, such as collecting better productivity data or staffing data and linking them to processing outcomes. (Recommendation 4)

The Associate Director of OPM’s Retirement Services should examine its process for assessing its assistance to agencies on retirement applications. For example, OPM could incorporate into its assessment process more agency feedback or documentation of assessment results, which could improve its partnership with agencies to strengthen the assistance provided. (Recommendation 5)

The Associate Director of OPM’s Retirement Services should work with agencies to determine if there are cost-effective ways to make the retirement application error report that it sends to agencies more user- friendly. For example, explore whether there are cost-effective ways to provide the error report in a format that could be manipulated (e.g., Excel spreadsheet), or to include additional information, such as incorporating disability retirement applications or providing clearer descriptions of errors or trend data, some of which OPM already collects. (Recommendation 6)

Agency Comments and Our Evaluation

We provided a draft of the report to OPM, DOD, HHS, NASA, and USPS for review and comment. In its comments, reproduced in appendix I, OPM concurred with 1 recommendation and partially concurred with the remaining 5 recommendations. HHS and NASA provided technical comments, which we incorporated as appropriate. DOD and USPS had no comments on the draft.

OPM partially concurred with our first recommendation to develop, document, and implement a Retirement Services IT modernization plan that includes costs and time frames for initial project phases. OPM stated that it has established initial high-level funding estimates for each of its five key IT initiatives, but OPM did not provide any documentation or further details. OPM cited that its ability to implement the modernization plan depends on the availability of funding and coordination with the agency’s top leadership. We agree these are important elements, which further underscore our recommendation. An IT modernization plan with objectives, cost estimates, and time frames could help support funding requests, as well as measure progress in implementing the initiatives.

OPM partially concurred with our second recommendation to enhance the use of performance information on processing timeliness to make more informed management decisions. OPM responded that it measures overtime spending, reviews daily work level in each work unit, and assesses employee productivity in these units. Collecting and reviewing such operational-level data contributes to monitoring efforts; however our recommendation emphasizes the importance of using performance information to better manage operations to align with organizational goals.

OPM partially concurred with our third recommendation to provide explanatory information as part of its reporting of processing timeliness. OPM agreed to add an explanation about disability retirement eligibility determinations to its public reports. OPM disagreed that reporting data on the range of processing times would be beneficial because, according to OPM, it provides processing information through other means, such as through applicants’ online accounts and agency benefit officers. While providing this information is beneficial, publically reporting data on the range of processing times helps improve the usefulness of performance information for applicants and external stakeholders, such as congressional oversight committees. Further, OPM acknowledged that it already collects and shares such data, which confirms it has the information and ability to implement this recommendation by adding appropriate summary notes to its public reporting. This action coupled with adding an explanation about disability retirement eligibility determinations should address the recommendation.

OPM partially concurred with our fourth recommendation to develop and implement policies and procedures for assessing strategies intended to improve processing times, including collecting data needed to support those strategies. OPM stated that a new case management system could provide better productivity and staffing data with which to assess effectiveness, but is dependent on funding and IT support. However, developing policies and procedures to manage and monitor its assessment process—such as determining when, how, and how often to conduct assessments and what data to collect—is not dependent on having a new case management system. In fact, establishing such policies and procedures could help inform system requirements in terms of data and reporting needs.

OPM concurred with our fifth recommendation to examine its process for assessing its assistance to agencies on retirement applications, and stated that it will incorporate more agency feedback into its assessment results on non-disability immediate retirement applications.

OPM partially concurred with our sixth recommendation to work with agencies to determine if there are cost-effective ways to make the error report more user-friendly. OPM stated that it will explore using MS Excel spreadsheets and incorporating clearer descriptions of errors and data trends. OPM asserted that our report incorrectly states that the data sent to agencies cannot be manipulated as agencies receive the data in MSWord documents from which they can create MS Excel spreadsheets. However, as OPM acknowledges, agencies have to create their own spreadsheets. Doing so requires agencies to manually enter the data to track and analyze errors, which increases the risk of data entry mistakes that could compromise the accuracy of original data, as we reported. OPM also stated that collecting disability application error information is not an inexpensive or simple process change. While we recognize OPM’s audit efforts may need to be modified to capture this type of error information, it would provide agencies with more comprehensive error data that could be used to improve the agencies’ application processes.

As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Acting Director of OPM, the Secretary of DOD, the Secretary of HHS, the Administrator of NASA, and the Postmaster General and Chief Executive Officer of USPS. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me at (202) 512-6806 or Jonesy@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.

Appendix I: Comments from the Office of Personnel Management

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact name above, Leah Querimit Nash (Assistant Director), Maya Chakko (Analyst in Charge), Mark Bird, Jackie Chapin, Jeff DeMarco, Elizabeth Fan, Gina Hoover, Ted Hu, Ben Licht, Meredith Moles, Robert Robinson, and Kayla Robinson made key contributions to this report.