Inflation affects every retiree, but not all federal retirees receive the same cost-of-living protection

Terry Gerton Federal employees are watching a lot of issues right now. Let’s start with retirement. Everybody always wants kind of a performance peg. How is OPM doing on retirement processing these days?

John Hatton They’re actually making great strides to get retirement processed in a more timely manner. We’re looking at a decrease in average time to process from 109 in July down to 66 in September and I think they have a goal of about 60 days. And the inventory where it reached a peak of about 65,000 in February is now down to under 10,000, about 8,800. So, they’re moving along and I think I’ve said, this process at OPM I think has done a pretty good job in what has been a wave of retirements coming in related to the Deferred Resignation Program, related to the reductions in force implemented by the administration in 2025. And so they had a large number of new cases coming in more than typical, significantly more than typical. They have adopted an online retirement processing, online retirement application process, digital processing. So they’re moving along that quickly. They had less people, again, do the administration’s policy. Some OPM staff took that deferred resignation program. And where we saw the biggest delays was not really at OPM, though there were some due to those workloads. It was at the agency and payroll processor level. But I think it’s really great to see that they took this very seriously to get people through this as quickly as possible. Now, of course, a lot of people had some long delays, either because of the agency payroll processor, or just because of the workload that OPM has had. But I think for their part, based on the stat that they had and the claims that they had coming in, I think they’ve done a good job of getting this down to a reasonable level right now.

]]>

Terry Gerton And it sounds like, then, that these new processes will be a great baseline going forward to keep this at a manageable level.

John Hatton Yeah, hopefully. They are moving through the digital case processing quicker than the paper based. So the stats reflect that that has improved the quickness of the processing times. Whether they can continue to adopt process improvements within that as well, we’ll see, but it’s certainly positive for the future to hope that these things can go through and hopefully people are starting to see those full annuities. And then people who have gotten from the agency and payroll processors over to OPM have gotten their return pay as well. So really thankful to see that they’re moving through this quicker.

Terry Gerton That is good news. And speaking of annuities, one of the issues that’s come up lately is cost of living adjustments depending on whether you’re in the FERS system or the CSRS system. And FERS retirees receive a smaller cost of living adjustment than CSRS recipients. Why has that become such a priority issue for NARFE?

John Hatton Well, inflation has been high recently and it continues to be high. And the purpose of a cost of living adjustment is to make sure your annuity and your retirement income isn’t devalued because prices continue to rise. And it was a compromise when they created FERS back in the 1980s, but I think not having a full cost of living adjustment as part of that compromise, it really undermines the value of that annuity over time. And when we are in high inflation times like we are now, that’s a significant reduction as it compounds year after year after a year. Any one year, it’s not a major difference. It’s 1% at most. But that 1% or 0.5%, depending on the year, or I think last year was 0.6%, it adds up. And it’s literally tens of thousands or even hundreds of thousands of dollars, depending on the size of your annuity, the length of your retirement that you’re going to lose in retirement income because of that.

Terry Gerton Is that the argument behind the Equal COLA Act?

John Hatton Yes, it is. It’s just to make sure that the cost of living adjustment does what it’s supposed to do, which is just maintain the value of that annuity. So the Equal COLA Act has been around originally introduced by Congressman Connolly, his successor, Congressman Wilkinshaw has introduced it, Senator Padilla in the Senate. It’s continued to grow in terms of support from one Congress to the next. And we’re just trying to continue to build that support up to a level that puts more pressure on the leaders and committees in the chambers to move that bill through. So we’re hopeful that we can continue to make progress on it, that our allies in Congress can get to build support for it as well, and that we can maybe just make sure that cost of living adjustment maintains that value for you.

Terry Gerton John Hatton is staff vice president at the National Active and Retired Federal Employees Association, NARFE. John, one of the other issues that’s out there for federal employees right now is a new rule from OPM that eliminates the long-standing time-in-grade requirement for promotions. This has gotten some attention. What do you think is at issue here?

]]>

John Hatton I think they’re looking to remove what they see as a barrier to rewarding high performers. And so, instead of requiring that you have to be in a job for a certain length, if a job opens up and you’ve been there for less than that 52 weeks and you have been doing a really good job, then it gives the managers the ability to promote that individual into the position.

Terry Gerton What do you think the concerns are then?

John Hatton There were some concerns reflected in the comments that this could be used to promote people based on favoritism or political loyalty. I think there is always that concern that needs to be balanced with performance management and giving managers flexibility to get the right people promoted and reward the right performers. So I understand that concern to some degree. Where we have taken our focus on that is making sure people can’t be fired without assessment of that being based on merit, not political favoritism, make sure that there’s a competitive hiring process and bring people in, making sure there’s whistleblower protections. And so we’ve been disappointed by the administration’s policies with regard to eliminating a lot of those merit-based protections that exist. I think this type of thing is a lot more minor and kind of is within a reasonable balance of performance management. The weight against the risk of favoritism, I think in any organization, you may have personal favoritisms; I think the biggest concern in the federal government is political favoritism, where decisions aren’t made based on objective factors, they’re based on subjective or who your political party is and how you’re giving out money, whether it’s to a favored locality or to a favorite group. That’s the bigger concern. I don’t think this is such a severe change as to implicate that as much as some of the other policies.

Terry Gerton There are so many moving pieces in federal civilian personnel policy right now. Are there any guardrails that you might like to see or that employees might want to see to keep this, as you describe as kind of a minor change?

John Hatton For this one, I don’t think we have any major objections to eliminating this, to put guardrails again. I think the guardraills we would like to see is not creating new excepted service schedules like Schedule Policy/Career or Schedule G in terms of eliminating competitive hiring practices. Not having non-disclosure requirements that then get subject to suitability determinations, removing repeals to the MSPB to OPM. Those are the things that we’re more concerned about than this type of change.

Terry Gerton As you sort of articulate that list, we are coming into a lame duck session of Congress after the election and there are a lot of civilian personnel policy issues that Congress could take up. What’s at the top of NARFE’s priority list for Congress when they get back?

John Hatton Well, coming back into December, they just need to get the government funded and not shut down. So I think that’s the number one priority is to reach some type of deal or at least a continuing resolution to reach a deal into the new year. Though I think, you already passed the September 30th deadline for funding. So my hope is they could get that done before the calendar year’s end and not extend it to the new year, but we prefer a continuing resolution over a shutdown. I think the biggest issue facing feds is a potential pay raise that could or could not be included in the appropriations bill. The alternative pay plan issued by the president calls for a pay freeze for almost all federal employees with the exception of law enforcement. We would like to see Congress step in and authorize a pay increase as part of the appropriations process that has been done before. In 2019, there was a pay raise provided after the fact, actually retroactively. So that is on the table, the Federal Workforce Caucus and members of Congress are pushing for that. It should be a subject of negotiations for appropriators. Where they land, how they get there remains to be seen.

Terry Gerton Any concerns, as the conjecture about the election will be a lot of turnover? Any concerns from NARFE about continuity around these issues?

John Hatton I think there’ll be enough people in Congress to lead the way on bringing them to the forefront next Congress. I think every election brings a different set of circumstances for who is in charge, who’s leading the agenda. So we plan a little bit, but we wait to make decisions and set some priorities based on the election results. And that will, I think, dictate what could get through the House or the Senate potentially. Senate is typically a more bipartisan body due to the filibuster. The House though, I think, could change what’s going through committees into the House floor based on what happens in the election.

]]>

Tags: