Budget Cuts Are Delaying USPS and Federal Retiree Payments

Government efforts to save pennies always seem to end up costing dollars, as some U.S. Postal Service and federal retirees are learning the hard way. As a result, future efforts to downsize the Postal Service through early retirements may suffer.

USPS’s most successful efficiency tactic in recent years has been reducing its workforce by offering Voluntary Early Retirement (VERA). But reports of disgraceful nine-month waits to start receiving full retirement checks discouraged many other employees from taking the offers.

The federal Office of Personnel Management made remarkable progress last year, reducing the backlog of federal and USPS retirement applications by 55%, the agency reported yesterday. In the first quarter of this year, OPM processed more applications than ever in recent memory, putting it “on track to eliminate the pending case backlog” and to achieve “our target processing time of 60 days.”

But look for more backlogs and delays, OPM warned.

With the help of additional overtime and improved processes, the agency was able to keep pace when faced with a wave of about 21,000 early-retirement applications from postal workers early this year. OPM reported that it “was able to produce an average of 14,000 claims per month in February, March, and April rather than the 11,500 per month plateau envisioned in the strategic plan.”

Then OPM was hit by the sequester – budget cuts that kicked in because Congress couldn’t come to agreement on how to close the federal budget gap. The cuts were automatic, with Congress and the Obama Administration having little ability to preserve spending that would end up saving money.

“Beginning on April 28, 2013, all overtime for employees working in RS [Retirement Services] at OPM was suspended and call center hours were reduced,” the agency said. “The loss of funding through sequestration resulted in a reduction of 20 to 25 percent of case production. Our current processing capability generally matches the receipts each month, preventing us from reducing the inventory, which is needed to reach our goal to process 90% of the cases within 60 days of receipt.”

"Retirees should expect an increase in the time required to respond to inquiries."

The sequester has also prevented the agency from replacing employees and may cause it to lose many of the temporary workers it hired to battle the backlog. (When government employees get jerked around like this, is it any wonder that "good enough for government work" is so often substandard?)

“While it is our hope that process improvements developed over the past year will ameliorate some of the adverse effects of these necessary actions, retirees should expect an increase in the time required to respond to inquiries,” the agency wrote.

If normal funding is restored when the new fiscal year begins in October, the agency estimates it can whittle the backlog down to target levels by March 2014. But that’s a big if.

After all, a previous ill-advised cost-cutting program got OPM into the backlog mess in the first place. Claims-processing staff was reduced a few years ago in anticipation of an automation system that ended up being a total failure.

In any case, postal workers considering retirement will still need to consider how they’ll get by in the months between the paycheck stopping and the full retirement checks coming.

Related articles:

• It's Good News, Bad News For USPS and Fed Retirees 
• For Postal Service Retirements, Slow Going Ahead  
• How Does the Postal Service Discourage Early Retirement? Let Me Count the Ways 
• The Hidden Benefit of Postal Service Retirement

It's Good News, Bad News For USPS and Fed Retirees

The good news is that the time required to finalize an employee's application to retire from the federal government or Postal Service has recently improved by about 15%. The bad news is that some retirees are still reporting that it's taking them nine months, even longer, to get their full annuity payments.

The typical time the Office of Personnel Management takes to process a retirement has dropped from 138 days in August to 117 days now, John Grobe wrote recently for FedSmith. But about 10 people submitted comments to the article saying that their own recent applications have been processed far more slowly.

As Dead Tree Edition has pointed out on several occasions, most recently in Do We Really Need New Laws To Get More Postal Employees To Retire?, the long wait to receive full retirement pay is a stumbling block for efforts to downsize the U.S. Postal Service through attrition.

OPM beefed up its retirement staff last year and eventually hopes to modernize its paper-based retirement processing system. It has made headway against the backlog of retirement applications, but was overwhelmed by the usual end-of-calendar-year spike in retirement applications, Grobe wrote.

OPM is also checking with the Postal Service "on current and future downsizings, so that any rush of retirements . . . can be quickly processed," Grobe added.

Two people who commented on the Grobe article said they retired July 31 of last year and will get their first full annuity checks on May 1.

Another commenter, who received interim annuity payments for more than six months that were less than half of the final figure, wrote, "I was taking money out of savings to meet the bills. I have a spouse who was contributing to the checking account also. Best be prepared, if you are the sole source of income when planning your retirement."

Wrote another "I retired 289 days ago and continue to receive monthly payments of $570 -- which is less than 1/4 of my expected annuity."

For Postal Service Retirements, Slow Going Ahead

Here's some bad news for both the U.S. Postal Service and postal employees who are eyeing retirement: The federal agency that has caused months of delays in processing retirement applications and issuing benefits checks isn't going to clean up its act any time soon.

The Office of Personnel Management's Retirement and Benefits Office "characterized by lengthy delays in processing claims, might not get much better any time soon," writes Tammy Flanagan of the National Institute of Transition Planning, in a recent Government Executive article. The agency has hired additional employees to work on the backload of claims and eventually hopes to modernize its paper-based processing system.

OPM officials acknowledge that the agency "still processes retirement claims in 2010 much the same way it did in 1920," Flanagan writes.

Downsizing the workforce through attrition, mostly retirements, is a major part of the Postal Service's plan to fix its finances. But the cumbersome process of getting accurate benefits estimates and timely payments deters retirement-eligible employees from calling it quits.

Postal Service retirees report that OPM was overwhelmed by USPS's early-retirement programs last year, with some waiting six months or longer to receive their first payments. (If a private business did that to its retirees, someone would probably end up in jail.)

Such waits have been common since at least the 1980s, Flanagan indicates. Her advice: Employees should save up annual leave in the year they retire so that they will get a lump-sum payment upon quitting that will see them through until the retirement checks start coming.

Related articles:

• USPS Getting Its Retirement Act Together? Nope 
• Why Does USPS Make Retiring Difficult When It Has So Many Excess Employees? Tough Question #5