Federal pension arrears are no longer OPM’s biggest challenge, but IG says customer service problems remain

The Office of Personnel Management continues to face several long-standing management challenges, but one in particular has been removed from the OPM Office of Inspector General’s latest list.

Due to “continuous improvements,” OPM’s backlog of federal pension claims is no longer a challenge for the agency’s top management, OPM IG Krista Boyd wrote in an Oct. 1 report.

After several years of increased federal pension application backlogs, the new IG report notes that OPM is now getting closer to achieving its goal of reducing the average processing time for pension applications to below 60 days. According to the most recent data currently available, OPM reduced its average processing time to 64 days and had an inventory of 15,178 pending claims from retiring federal employees.

About 15,000 pending claims puts OPM above its “stable status” goal of having an inventory of 13,000 claims at any given time. However, this is still the lowest number of claims the agency has recorded in two years. By comparison, in October 2022, OPM had 25,227 pending claims on the federal pension benefit rolls – more than 10,000 above the current level.

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

“However, the IG report’s conclusions that there is still much work to be done to improve customer service are consistent with what NARFE members report about their experiences,” John Hatton, NARFE vice president of policy and programs, told Federal News Network .

Customer service satisfaction remains an issue

OPM continues to face challenges in providing customer service in its retirement services division, IG wrote in its latest management report. And while there has been some improvement, there are still “ongoing concerns,” the IG said, about the time it takes to process claims.

“While OPM has made significant progress in reducing the backlog of federal retirement claims, providing customer service to federal retirees remains a challenge for top management,” the report said.

Notably, between fiscal year 2022 and 2023, OPM’s average customer satisfaction score decreased by 0.29 points, moving from 3.74 to 3.45 from a total score of 5. In its strategic plan, OPM has set a goal to increase its satisfaction score clients to 4.2 from 5 by 2026. However, the IG found that the agency is currently at risk of being unable to meet this performance target.

OPM is expected to formally respond to the IG’s findings in November as part of an upcoming financial report. An OPM spokesman said the agency would be able to provide more updates once the report is released.

IG says the primary cause of declining customer service satisfaction is understaffing in OPM’s retirement services division, which is largely due to budget and agency resource challenges.

“OPM sometimes receives too many customer service calls and email inquiries regarding customer service representative staffing levels,” the report says.

Hatton said declining customer satisfaction “is not surprising” given that NARFE similarly hears many questions and concerns from federal retirees about customer service at OPM’s Office of Retirement Services.

“That’s why NARFE supports adequate funding for OPM’s retirement services to meet customer needs,” Hatton said. “But we also urge OPM to continue implementing and accelerating IT modernization by adopting an online pension application and a digital case management system.”

The IG report found that, along with understaffing, challenges associated with transitioning to a modern federal retirement system and receiving incomplete claims further hamper OPM’s ability to effectively process retirement claims. If components are missing from a recall request, this significantly slows down processing times.

In the future, OPM plans to improve retirement employee training, better collaborate with agency benefits officials and increase collaboration with federal annuitants, all with the ultimate goal of achieving higher levels of customer satisfaction.

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

OPM’s plans to modernize federal pensions

For several years, OPM has been working to modernize its pension processing system. In 2024, OPM piloted an online federal retirement application platform that showed promise with several federal payroll providers.

“It will take us many years, but with this heart, we will improve the way someone begins to retire,” OPM CIO Guy Cavallo said in a recent interview with Federal News Network. “We make sure the calculation service is correct and then we work to get rid of the paper versions and go digital. These are our first three building blocks.”

For years, OPM has been trying to move the pension process away from paper and modernize the systems used. In 2023, Cavallo said he was modernizing OPM’s retirement systems in a “bite-bite” approach.

At the same time, however, limited resources have slowed progress on the modernization project, as well as on the agency’s other IT modernization goals. The report indicates that OPM funding levels are not sufficient to achieve these goals.

Instead, OPM took other actions to obtain additional funding and reduce costs, the report said. First, OPM partnered with the Technology Modernization Fund and pledged more than $7 million of the total $16 million in TMF funds for IT modernization expenses.

“While these are positive steps, dedicated IT modernization funding is needed for OPM to achieve its IT modernization goals,” the report says.

Insurance program challenges, skills gaps

In addition to issues related to retirement services, OPM also faces ongoing challenges with the federal Employee Health Benefits (FEHB) program, as well as the new Postal Service Health Benefits (PSHB) program, according to the IG report.

For plan year 2025, OPM is launching an entirely new Postal Service program designed to provide health insurance to approximately 2 million postal workers, retirees and their family members. Like FEHB enrollees, new PSHB enrollees will be able to make changes to their 2025 health care options during the Open Season, between November 11 and December 9.

During the inaugural open season for PSHB enrollees, the IG anticipates the challenges Postal enrollees will face as they look at new health insurance options and navigate the program. The report said one of these challenges stems from the “narrow development and testing window” OPM had to prepare the insurance program. Congress gave OPM less than three years to fully develop and launch the program.

“OPM also faces the challenge of ensuring that USPS registrants receive appropriate communication to understand the PSHB, as well as the new requirements for PSHB participation,” the report says. “It is critical that USPS members, especially annuitants, receive the necessary customer service assistance necessary to successfully register. PSHB’s initial open season will be a challenge for OPM as it will strain agency resources across multiple business units.”

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

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

By FY 2026, OPM plans to provide agencies with more details and leading practices that will help them address skills gaps across the government. Today, the biggest skills gaps in the federal government are in cybersecurity, acquisitions and human resources.