OPM Asks for $26M for Retirement Systems Upgrade

April 6, 2006 (PLANSPONSOR.com) - The federal government's personnel agency has asked Congress for a special $26.7 million appropriation for a "retirement systems modernization project."

Linda Springer, director of the federal Office of Personnel Management (OPM), said OPM needs the money to properly handle the workload connected with processing the 290,000 federal employee retirement requests received between 2003 and 2005, the Washington Post reported.

Currently, each retirement claim requires a tedious, and sometimes lengthy, search for personnel folders and other paperwork – “a shameful way” of doing business, Springer told the House federal workforce subcommittee.

Upgraded computer systems will make it easier for OPM to speed up pension payments and to reduce the time that a retiree remains on interim retirement pay while a final annuity is being calculated, Springer testified.

OPM cannot begin processing retirement claims until it receives data on the departing employees from their agencies, which can take more than 30 days. For February, Springer noted, OPM had about 12,000 retirement cases on hold, pending the receipt of employment and work history information.

Once the data arrives, OPM employees pull the rest of an employee’s work history from records stored in a Pennsylvania mine. The personnel files fill 144,000 drawers in 28,000 file cabinets, Springer said.

OPM projects modest increases in retirement claims in coming years but says the government could face a surge in 2008-2010 as more baby boomers hit retirement age.

The retirement program is a significant part of OPM’s entitlement spending. The agency pays more than $52 billion per year in benefits to about 2.4 million retirees and their survivors.