Not on the hearing’s agenda, but lurking in the background, is the Congressional Budget Office report released this week that looks at another aspect of federal retirement — the level of retirement benefits federal employees get compared with those in the private sector. The CBO estimated that “on average for workers at all levels of education, the cost of hourly benefits was 48 percent higher for federal civilian employees than for private-sector employees.”
The “most important factor” in that difference “is the defined-benefit pension plan that is available to most federal employees,” the report continued. “Such plans are becoming less common in the private sector.”
This finding bolsters the push of congressional Republicans to cut retirement benefits or have workers pay more for them. In December, the House approved legislation that would require current federal employees to increase their required retirement contributions by 1.5 percentage points over three years for, in some cases, reduced benefits. Employees hired starting in 2013 would pay even more for benefits that would be reduced, compared with current policy, by basing annuities on the highest five years of salary instead of the highest three, which is the practice now.
Last week, Andrew G. Biggs, a resident scholar at the American Enterprise Institute, told a House hearing that “a less-generous federal retirement package is unlikely to significantly affect the federal government’s ability to attract and retain employees.”
Now he can point to the CBO report as backup.
While some envision a less generous federal retirement package, federal retirees would like to get the full payments they are due on time. The average wait is five months, according to the Office of Personnel Management, though complaints of delays as long as a year are not uncommon. During the wait, however, the OPM says retirees do get interim payments that average about 80 percent of the full amount.
A Government Accountability Office report scheduled to be released at the federal workforce subcommittee hearing provides a long history of the OPM’s inability to modernize its retirement systems. The headline and main conclusion of the GAO report is that “Progress has been hindered by longstanding technology management weaknesses.”
There is a complex, paper-based, manually intensive process that “uses over 500 different procedures, laws, and regulations . . . to process retirement applications,” according to the report by Valerie C. Melvin, the GAO’s director of information management and technology resources issues.
“For over 2 decades, OPM has been attempting to modernize its federal employee retirement processes and replacing antiquated information systems,” the report says. “However, these efforts have been unsuccessful, and OPM canceled its most recent retirement modernization effort in February 2011.”
In a statement prepared for the hearing, subcommittee chairman Daniel K. Akaka (D-Hawaii), says “this is not the type of Federal Government that will regain the faith of the American public, and is not a Government living up to the potential that I know it has.”
In 2005, the GAO recommended remedies for management weaknesses. In 2008, just as the OPM was about to deploy an automated retirement system, the GAO found that the system had not performed as intended, among other problems. In 2009, the GAO said it found similar problems. OPM started to fix them but decided to cut its losses.
“OPM agreed with these recommendations and began to address them,” the current GAO report says, “but the agency terminated the modernization effort in February 2011.”
Attempting to resolve the difficulties, OPM Director John Berry recently sent a “Strategic Plan for Retirement Services” to Congress. Among other things, it calls for hiring more retirement service staffers, firing incompetent ones and setting production goals to make sure the work gets done.
The GAO acknowledged Berry’s goal to process the backlog — more than 48,000 cases in December — within 18 months and then to process 90 percent of the cases within 60 days. “However,” the GAO said, “this goal represents a substantial reduction from the agency’s fiscal year 2009 retirement modernization goal to accurately process 99 percent of cases within 30 days.”
Berry has said fixing the retirement process is his top priority for 2012. In an interview with the Federal Diary in early January, he said: “It’s been a great frustration.”
Staff writer Eric Yoder contributed to this column. Previous columns by Joe Davidson are available at
wapo.st/JoeDavidson
. Follow the Federal Diary on Twitter: @JoeDavidsonWP
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