OIG: Update for Measuring Pension and Retiree Health Benefits Liabilities

Background

The U.S. Postal Service provides pension and health insurance benefits to its retirees. Postal Service employees participate in the Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) pension programs. The Office of Personnel Management (OPM) administers these programs, including projecting future CSRS and FERS assets and liabilities for the federal government and Postal Service. Continue reading

Retiree COLAs Set at 1.5%

APWU Web News Article 124-2013, Nov. 1, 2013

The Social Security Administration has announced a cost-of-living adjustment (COLA) of 1.5 percent for federal and postal retirees.

Retirees over the age of 62 who have been receiving benefits for a year more as of Dec. 31, 2013, will receive the full amount. The Office of Personnel Management (OPM) will pro-rate the percentage for those who have been receiving benefits for less than one year as of Dec. 31.

The increase will be reflected in the January 2014 annuity and will apply to retirees covered by both the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS).

Annuitants on FERS disability retirement will receive the COLA regardless of age, unless they are receiving 60 percent or more of their high-three salary.

Retirees have been eagerly awaiting the announcement, which was made approximately two weeks later than usual, on Oct. 30, because of the government shutdown.

Go Figure

Cost-of-living adjustments for federal and postal retirees are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as the CPI-W, but the calculation method has been the subject of great controversy in recent months.

The APWU Retirees Department and other retirees’ organizations have been urging Congress to use the Consumer Price Index for the Elderly (CPI-E), which takes into account seniors’ higher spending on medical care and the higher inflation rates they encounter as a result. This would more accurately reflect the increased cost of living retirees face and would result in greater COLAs.

While the COLA for 2014 is safe, in Congressional debt negotiations, some legislatives have proposed reducing federal and postal retirement benefits by using the “chained CPI.”

“The chained CPI is an unrealistic way to calculate the living expenses seniors face,” said Retirees Department Director Judy Beard. “We must continue to make it known to our representatives and to President Obama that our COLAs are not negotiable. If anything, they should be increased by using the CPI-E formula.”

 

Retiree COLA to Be Among Lowest in Years

WASHINGTON — For the second straight year, millions of Social Security recipients, disabled veterans and federal retirees can expect historically small increases in their benefits come January.

Preliminary figures suggest a benefit increase of roughly 1.5 percent, which would be among the smallest since automatic increases were adopted in 1975, according to an analysis by The Associated Press.

Read more: Social Security Raise to Be Among Lowest in Years – NYTimes.com.

House committee investigates pension backlog

Office of Rep. Blake Farenthold (R-TX) News Release

WASHINGTON – U.S. Representative Blake Farenthold (TX-27), Chairman of the House Oversight Subcommittee on the Federal Workforce, U.S. Postal Service and the Census, today held a hearing looking at the time it takes the Office of Personnel Management (OPM) to process federal worker pension claims.

“2.5 million retired federal workers and their survivors rely on their pension check every month to make ends meet. What’s shocking to me is that OPM, who administers these checks, does it the same way today that they did it in 1987. This lack of modernization has resulted in a backlog of 30,000 claims, while the OPM averages $100 million each year in payments to deceased annuitants and survivors. OPM’s processing of these claims is clearly not efficient and effective and just reinforces the government’s poor IT record,” said Congressman Farenthold in his opening statement.

“While the President’s budget recommends $2.6 million to fund a case management system, the budget is short on detail and provides little guidance on how OPM will achieve a modern system. We’ve seen hundreds of millions of dollars wasted in failed information technology contracts, yet reform still seems vague,” continued Rep. Farenthold.

The Subcommittee heard testimony from Mr. Patrick McFarland, Inspector General at the U.S. Office of Personnel Management, Mr. Kenneth Zawodny, Associate Director of Retirement Services at the U.S. Office of Personnel Management, Ms. Valerie C. Melvin, Director, Information Management & Technology Resource Issues, U.S. Government Accountability Office, Mr. Joseph A. Beaudoin, President, National Active and Retired Federal Employees Association, and Dr. George Kettner, President, Economic Systems, Inc.

During the questioning portion of the hearing, Congressman Farenthold spoke to the benefits of using technology to modernize and streamline OPM’s processing of retired federal employee pension claims.

“Do you see some things that OPM could do immediately to kick the technology up, save some time and get the claims processed faster?” Rep. Farenthold asked government IT expert Valerie Melvin.

“The approach that they are taking now, which we see as a very modest, incremental step…is probably a prudent and risked-based approach for them to take, given their inability to be successful with such initiatives in the past,” replied Ms. Melvin.

Congressman Farenthold asked the same question to Dr. Kettner, whose company, Economic Systems Inc., specializes in data entry software.

“I think there are certainly steps that could be taken immediately, and I think you’re entirely correct in thinking that more could be done at the agency level. That’s where the data comes from and where much more can be done. There is no reason in the world the data should not be given to OPM electronically,” concluded Mr. Kettner.

OPM has less than 60 days to achieve its short-term goal of reducing the backlog and processing 90 percent of claims within 60 days. In response to a question from Representative Farenthold about meeting this short-term goal, Mr. Zawodny expressed some insecurity but told the committee he was hopeful it could be met.

Read more: Factiva.