Federal Retirement: OPM Actions Needed to Improve Application Processing Times

According to OPM, it receives more than 100,000 retirement applications each fiscal year. Between 2014 to 2017, OPM did not meet its goal of processing most retirement applications within 60 days. GAO was asked to review potential improvements in federal retirement processing at OPM. This report (1) describes the root causes of retirement application processing delays, as determined by OPM; and (2) examines what strategies, if any, OPM has taken to address those root causes, and how OPM has evaluated the effectiveness of the strategies.

GAO reviewed OPM data and documents, and interviewed OPM officials. GAO also interviewed officials from DOD, HHS, NASA, and USPS about their experiences with processing retirement applications. GAO selected these agencies because they represent a variety of application error rates and relatively high application volume.

The Office of Personnel Management (OPM), which administers the federal retirement program, identified three root causes for retirement processing delays:

1. the continuing reliance on paper-based applications and manual processing;

2. insufficient staffing capacity, particularly during peak workload season; and

OPM has taken various actions to address these root causes and thereby reduce delays.

Vision for modernizing retirement processing. OPM's strategic vision consists of five key initiatives for modernizing the application process, including developing an electronic application form and an electronic system to store retirement information. However, OPM was unable to provide estimated time frames or costs for the initiatives. OPM officials said that additional information technology (IT) modernization work is dependent on sufficient funding, among other factors. These factors are important but do not preclude OPM from establishing estimated cost ranges and time frames—practices consistent with industry best practices and IT project management principles.

Actions to increase staffing capacity. OPM's actions have included using overtime pay and hiring additional staff. However, OPM generally does not assess the effectiveness of these actions or whether they reduce delays. For example, OPM does not measure overtime productivity or correlate overtime data with application processing data. Federal internal control standards state that management should review its performance compared to its goals. OPM officials stated that they have limited resources for assessments. However, without assessments, OPM is less able to make informed decisions on how to best use staffing practices to improve processing times.

Actions to reduce missing information in applications. OPM provides assistance to agencies through guidance, training, communication through liaisons and email, and error reports. OPM's monthly error reports to agencies include information on the type of error found and the volume of applications with the same error, according to OPM. The four agencies GAO interviewed—Department of Defense (DOD), Department of Health and Human Services (HHS), National Aeronautics and Space Administration (NASA), and U.S. Postal Service (USPS)—reported that aspects of the error reports were not user-friendly. OPM stated that its assistance is intended to help agencies submit complete and accurate retirement packages for quicker processing. Federal internal control standards state that management should communicate quality information externally and periodically reevaluate its communication methods. OPM officials stated that the error report is intended to capture the overarching errors many agencies face and that revising the error report would not be cost-effective. However, the current format of the error report may limit its usefulness to agencies in improving their retirement applications.

GAO is making 6 recommendations. These recommendations include that OPM should develop a retirement services IT modernization plan for initial project phases; develop and implement policies for assessing staffing strategies intended to improve processing times; and determine if there are cost-effective ways to make the retirement application error report more user-friendly. OPM concurred with 1 recommendation and partially concurred with 5 recommendations. GAO continues to believe all aspects of the recommendations are valid, as discussed in the report. GAO also incorporated technical comments.

The Office of Personnel Management (OPM) manages and administers  the federal retirement program, which includes processing the retirement  applications that federal employees must submit through their agencies  as paper applications. The federal retirement program covers more than  2.4 million active employees and OPM receives more than 100,000  retirement applications each fiscal year, according to OPM. Between  2014 and 2017, OPM reported that it did not meet its goal of processing  90 percent of retirement applications within 60 days. During this time  period, OPM processed from 57 to 79 percent of retirement claims within  60 days each fiscal year. OPM’s new goal as of April 2018 is to process  all applications within an average of 60 days, which OPM reported that it  achieved for 5 of the 9 months from April to December 2018.

You asked us to review potential improvements in federal retirement  processing at OPM. For this report, we (1) describe the root causes of  retirement application processing delays, as determined by OPM; (2)  examine what strategies, if any, OPM has developed and implemented to  address those root causes, and how OPM has evaluated the  effectiveness of the strategies; and (3) identify strategies selected  agencies use to help them compile accurate retirement applications.

To address our first and second objectives, we reviewed OPM documents  and interviewed OPM officials in both the headquarters and in the  Retirement Operations Center in Boyers, Pennsylvania. We toured the  Boyers facility and interviewed staff on the retirement application process.  For our second objective, we also assessed OPM’s strategies against  criteria that included federal standards for internal control and using data  to manage performance. In addition, to provide background and context  about OPM’s actions to identify root causes, we analyzed OPM data on  processing volume for retirement applications. To determine the reliability  of the data, we reviewed relevant OPM documents and consulted OPM  officials about data collection methods. We found the data to be reliable  for our purposes of reporting on processing volume for fiscal years 2016  through 2018.

To address our third objective, we selected four agencies as case  illustrations—the Department of Defense (DOD), the Department of  Health and Human Services (HHS), the National Aeronautics and Space  Administration (NASA), and the U.S. Postal Service (USPS). Our  selection of agencies was based on analysis of several characteristics of  OPM’s data on agency errors for fiscal years 2014 to 2016 across 97  agencies. We narrowed our scope to 17 agencies that we categorized as  having a relatively high number of applications—more than 1,000 for  fiscal years 2014 through 2016 combined. Within that scope, we selected  four agencies that represented a variety of error rates and levels of  application volume to provide a range of agency experiences.

The four agencies represent 56 percent of all applications audited by  OPM for agency errors in fiscal years 2014 to 2016. These agencies also  represent 46 percent of all audited applications that OPM identified as  having errors in fiscal years 2014 to 2016. Although these agencies do  not represent the experiences of all agencies government-wide, they  provide illustrative examples of experiences that agencies have with  retirement applications. To determine the reliability of the agency error  data, we reviewed relevant OPM documents and consulted OPM officials  about OPM’s data collection methods. We found the data to be reliable  for our purpose of selecting agencies. We also reviewed agency  documentation related to the selected agencies’ retirement application  operations and conducted semi-structured interviews with agency staff.

We conducted this performance audit from October 2017 to May 2019 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

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

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.

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.

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.

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)

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

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.

The Office of Personnel Management receives over 100,000 federal retirement applications each year. Between 2014 and 2017, OPM did not meet its goal of processing most applications within 60 days.

OPM identified 3 main reasons for delays:

Continued reliance on paper applications and manual processing

Insufficient staffing, particularly during peak season

OPM has taken steps toward modernizing the process, such as planning for an electronic application, but it lacks a timetable and cost estimates for IT modernization.

We made 6 recommendations, including that OPM develop an IT modernization plan.