Federal retirement backlog no longer top challenge for OPM, but IG says customer service issues remain

The Office of Personnel Management is still facing several long-standing management challenges, but one challenge in particular has been knocked off the latest list from OPM’s inspector general office.

Due to “continued improvements,” the federal retirement claims processing backlog at OPM is no longer a top management challenge for the agency, OPM IG Krista Boyd wrote in an Oct. 1 report.

After several years of a heightened federal retirement claims backlog, the new IG report noted that OPM is now closing in on its goal of bringing its average time for processing a retirement claim below 60 days. As of August, the most recent data currently available, OPM decreased its average processing time to 64 days, and had an inventory of 15,178 pending claims from retiring federal employees.

The some 15,000 pending claims put OPM over its “steady state” goal of a 13,000-claim inventory at any given time. But it’s still the lowest number of claims the agency has seen in two years. In comparison, in October 2022, OPM had 25,227 pending claims in its federal retirement inventory — over 10,000 above the current levels.

For the National Active and Retired Federal Employees Association (NARFE), the IG’s removal of the retirement claims processing backlog from OPM’s list of top challenges is “a welcome sign of progress.”

“But the IG report’s findings that there is more work to be done to improve customer service is consistent with what NARFE members report regarding their experiences,” John Hatton, NARFE’s staff vice president of policy and programs, told Federal News Network.

Customer service satisfaction remains an issue

OPM continues to face the challenge of addressing customer service in its Retirement Services department, the IG wrote in the latest management report. And while there has been some improvement, there is still “continued concern,” the IG said, regarding the time it takes to process claims.

“While OPM has made substantial progress in reducing the backlog of federal retirement applications, providing customer service to federal annuitants and survivor annuitants remains a top management challenge,” the report said.

Notably, between fiscal 2022 and 2023, OPM’s average customer satisfaction score declined by 0.29 points, moving from 3.74 down to 3.45 out of a total score of 5. In its strategic plan, OPM set a goal of bringing its customer satisfaction score up to 4.2 out of 5 by 2026. But the IG said the agency is currently at risk of being unable to meet that performance objective.

OPM is expected to formally respond to the IG’s findings in November as part of an upcoming financial report. An OPM spokesperson said the agency will have more updates to share when that report is published.

A major reason behind the dip in customer service satisfaction is due to inadequate staffing levels in OPM’s Retirement Services division, the IG said, which stem in large part from budget and resourcing challenges for the agency.

“OPM, at times, receives too many customer service callers and email queries for its customer service representative staffing levels,” the report said.

Hatton said the declining customer satisfaction score is “not surprising,” given that NARFE similarly hears many questions and concerns from federal retirees about customer service in OPM’s Retirement Services office.

“That’s why NARFE supports adequate funding for OPM retirement services to meet customer needs,” Hatton said. “But we also urge OPM to continue to implement and accelerate IT modernization through adoption of an online retirement application and a digital case management system.”

Along with insufficient staffing, the challenges of transitioning to a modern federal retirement system and receiving incomplete applications additionally make it more difficult for OPM to be able to efficiently process retirement claims, according to the IG report. When there are missing components on a retirement application, it significantly slows down the processing time.

Moving forward, OPM plans to improve training Retirement Services employees, better collaborate with agency benefits officers and strengthen engagement with federal annuitants, all with the end goal of pursuing higher levels of customer satisfaction.

“OPM must continue its efforts to improve the overall experience for active federal employees, annuitants, survivors and their eligible family members who need customer service from the agency,” the report said.

OPM’s plans to modernize federal retirement

For the last few years, OPM has been working to modernize its retirement processing system. During 2024, OPM tested a pilot online federal retirement application platform, which has already shown promise with several federal payroll providers.

“It’s going to take many years for us to do this, but by taking the heart of that, we’re improving the way somebody starts to retirement,” OPM CIO Guy Cavallo said in a recent interview with Federal News Network. “We’re making sure the calculation service is correct, and then we’re working to get rid of paper versions and move to digital. Those are our first three building blocks.”

OPM has struggled to move the retirement process away from paper and modernize the systems it uses for years. In 2023, Cavallo said he has been taking a “small bite” approach to modernizing OPM’s retirement systems.

But at the same time, limited resources have slowed down progress for the modernization project, as well as for other IT modernization goals of the agency. The report said OPM’s appropriations funding levels are not enough to achieve those goals.

Instead, OPM has taken other measures to pursue additional funding and cut costs, the report said. For one, OPM has partnered with the Technology Modernization Fund, and has obligated over $7 million of its total $16 million in TMF funding to go toward IT modernization efforts.

“While these are positive steps, dedicated funding for IT modernization is needed to ensure that OPM reaches its IT modernization goals,” the report said.

Challenges with insurance programs, skills gaps

Along with issues in Retirement Services, OPM is also facing ongoing challenges in the Federal Employee Health Benefits (FEHB) program, as well as the new Postal Service Health Benefits (PSHB) program, the IG report said.

For plan year 2025, OPM is launching a brand-new Postal program to provide health insurance to roughly 2 million Postal employees, annuitants and their family members. Similar to FEHB enrollees, new participants in the PSHB program will be able to make changes for their 2025 health care options during Open Season, between Nov. 11 and Dec. 9.

During the inaugural Open Season for PSHB enrollees, the IG is anticipating challenges for Postal enrollees as they look at new health insurance options and navigate the program. One of those challenges stems from a “narrow development and testing window” that OPM had for putting together the insurance program, the report said. Congress gave OPM less than three years to fully develop and launch the program.

“OPM is also challenged with ensuring that USPS enrollees receive adequate communication to understand the PSHB as well as the new requirements to participate in the PSHB,” the report said. “It is critical that USPS members, especially annuitants, receive the necessary customer service assistance for a successful enrollment. The initial PSHB Open Season will present a challenge to OPM as it will strain the agency’s resources across multiple business units.”

Additionally, skills gaps and strategic human capital management continue to be major management challenges for OPM. More than half of the government’s biggest challenges, according to the Government Accountability Office’s High Risk List, stem from mission-critical skills gaps.

“Implementing the one priority recommendation in this area — to establish an action plan to address skills gaps identified in its workforce assessment — will help OPM improve its capacity in these areas,” the report said. “It would also help OPM to provide human capital services and guidance to agencies.”

By fiscal 2026, OPM plans to give agencies more details and leading practices to help them address skills gaps across government. Currently, the biggest skills gaps in the federal government are in cybersecurity, acquisition and human resources.

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