Detailed Information on the
Federal Employees Retirement Assessment

Conducting an independent program evaluation of sufficient scope and quality; OPM will use the information to demonstrate that the program is effective and is achieving results.

Establishing ambitious targets for the long-term goals and demonstrating adequate progress in achieving these performance goals by 2008.

Holding program managers and partners accountable for cost, schedule and performance results by 2008.

Demonstrating that the program and its partners are achieving their annual performance goals by 2008.

Measure: Measure: % of new hires who say the retirement annuity (the payment received in retirement, excluding the thrift savings plan) and the thrift savings plan (similar to 401k plan in the private sector) are important or very important in their decision to accept a job with the Federal Government.

Explanation:Data Source: Federal Benefits Survey (SHRP). The Federal Benefits survey was first administered in 2004 and it was administered again in 2006. In 2006 it was issued to a random sample of 2000 employees. The purpose of the survey was to measure employee attitudes about the importance, value, adequacy and competitiveness of the benefits programs with regard to recruitment and retention. The targeted population included about equal numbers of current employees (with three years or more of Federal service) and new hires (with less than three years of service). OPM received 850 survey respondents; 380 were new hires and 470 were current employees. Target for 2006 through 2009 was set at 2004 baseline. Upon comparison of trends associated with employee opinion data gained from this survey with implementation of more objective measures of recruitment and retention comparisons, OPM will be able to set longer-term objective, outcome-oriented targets.

Measure: Measure: % of new hires (considering the amount they have to pay), the retirement annuity (the payment received in retirement, excluding the thrift savings plan) and the thrift savings plan (similar to 401k plan in the private sector) are excellent value for the money or good value for the money.

Explanation: Data Source: Federal Benefits Survey (SHRP). The Federal Benefits survey was first administered in 2004 and it was administered again in 2006. In 2006 it was issued to a random sample of 2000 employees. The purpose of the survey was to measure employee attitudes about the importance, value, adequacy and competitiveness of the benefits programs with regard to recruitment and retention. The targeted population included about equal numbers of current employees (with three years or more of Federal service) and new hires (with less than three years of service). OPM received 850 survey respondents; 380 were new hires and 470 were current employees. Target for 2006 through 2009 was set at 2004 baseline. Upon comparison of trends associated with employee opinion data gained from this survey with implementation of more objective measures of recruitment and retention comparisons, OPM will be able to set longer-term objective, outcome-oriented targets.

Measure: Measure: % of new hires who rate the retirement annuity (the payment received in retirement, excluding the thrift savings plan) and the thrift savings plan (similar to 401k plan in the private sector) as very competitive or moderately competitive in comparison to those offered to other (non-Federal) employees.

Explanation:Data Source: Federal Benefits Survey (SHRP). The Federal Benefits survey was first administered in 2004 and it was administered again in 2006. In 2006 it was issued to a random sample of 2000 employees. The purpose of the survey was to measure employee attitudes about the importance, value, adequacy and competitiveness of the benefits programs with regard to recruitment and retention. The targeted population included about equal numbers of current employees (with three years or more of Federal service) and new hires (with less than three years of service). OPM received 850 survey respondents; 380 were new hires and 470 were current employees. No target values were set for 2004; this was the initial survey and the survey 2004 survey data established an initial survey baseline. Data for 2005 (non-survey year) reflects target and actual for 2004 etc. Target for 2006 through 2009 was set at 2004 baseline. Upon comparison of trends associated with employee opinion data gained from this survey with implementation of more objective measures of recruitment and retention comparisons, OPM will be able to set longer-term objective, outcome-oriented targets.

Measure: Measure: % of employees who say the retirement annuity (the payment received in retirement, excluding the thrift savings plan) and the thrift savings plan (similar to 401k plan in the private sector) are important or very important in their decision to remain in the Federal Government.

Explanation:Data Source: Federal Benefits Survey (SHRP). The Federal Benefits survey was first administered in 2004 and it was administered again in 2006. In 2006 it was issued to a random sample of 2000 employees. The purpose of the survey was to measure employees' attitudes about the importance, value and competitiveness of the benefits programs with regards to recruitment and retention. The targeted population included about equal numbers of current employees (with three years or more of Federal service) and new hires (with less than three years of service). OPM received 850 survey respondents; 380 were new hires and 470 were current employees. No target values were set for 2004; this was the initial survey and the survey 2004 survey data established an initial survey baseline. Data for 2005 (non-survey year) reflects target and actual for 2004 etc. Target for 2006 through 2009 was set at 2004 baseline. Upon comparison of trends associated with employee opinion data gained from this survey with implementation of more objective measures of recruitment and retention comparisons, OPM will be able to set longer-term objective, outcome-oriented targets.

Measure: Measure: % of employees (considering the amount they have to pay), the retirement annuity (the payment received in retirement, excluding the thrift savings plan) and the thrift savings plan (similar to 401k plan in the private sector) are excellent value for the money or good value for the money.

Explanation:Data Source: Federal Benefits Survey (SHRP). The Federal Benefits survey was first administered in 2004 and it was administered again in 2006. In 2006 it was issued to a random sample of 2000 employees. The Federal Benefits survey is not administered every year. The survey was first administered in 2004 and 2006. The 2006 Benefits Survey was issued to a random sample of 2000 employees. The purpose of the survey was to measure employees' attitudes about the importance, value and competitiveness of the benefits programs with regards to recruitment and retention. The targeted population included about equal numbers of current employees (with three years or more of Federal service) and new hires (with less than three years of service). OPM received 850 survey respondents; 380 were new hires and 470 were current employees. No target values were set for 2004; this was the initial survey and the survey 2004 survey data established an initial survey baseline. Data for 2005 (non-survey year) reflects target and actual for 2004 etc. Target for 2006 through 2009 was set at 2004 baseline. Upon comparison of trends associated with employee opinion data gained from this survey with implementation of more objective measures of recruitment and retention comparisons, OPM will be able to set longer-term objective, outcome-oriented targets.

Measure: Measure: % of employees who rate the retirement annuity (the payment received in retirement, excluding the thrift savings plan) and the thrift savings plan (similar to 401k plan in the private sector) as very competitive or moderately competitive in comparison to those offered to other (non-Federal) employees.

Explanation:Data Source: Federal Benefits Survey (SHRP). The Federal Benefits survey was first administered in 2004 and it was administered again in 2006. In 2006 it was issued to a random sample of 2000 employees. The Federal Benefits survey is not administered every year. The survey was first administered in 2004 and 2006. The 2006 Benefits Survey was issued to a random sample of 2000 employees. The purpose of the survey was to measure employees' attitudes about the importance, value and competitiveness of the benefits programs with regards to recruitment and retention. The targeted population included about equal numbers of current employees (with three years or more of Federal service) and new hires (with less than three years of service). OPM received 850 survey respondents; 380 were new hires and 470 were current employees. No target values were set for 2004; this was the initial survey and the survey 2004 survey data established an initial survey baseline. Data for 2005 (non-survey year) reflects target and actual for 2004 etc. Target for 2006 through 2009 was set at 2004 baseline. Upon comparison of trends associated with employee opinion data gained from this survey with implementation of more objective measures of recruitment and retention comparisons, OPM will be able to set longer-term objective, outcome-oriented targets.

Measure: Measure: % of employees who say they are on track or ahead of schedule when it comes to planning and saving for retirement

Explanation:Data source: Retirement Readiness Index Survey. In response to The Thrift Savings Plan Open Elections Act of 2004, OPM was directed to develop a strategy to "provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals". The initial study survey used a variety of demographic factors including age and income and career stage, was conducted between May and September 2005 through an Internet survey with 7,294 Federal workers. A stratified sample was used to obtain sufficient response from minority and lower-income groups. This measure focuses on the outcome of retirement financial education??how to plan for retirement. No target values were set for 2005 through 2009; this was the initial survey and the survey 2005 survey data established an initial survey baseline. Target for 2006 through 2009 was set at 2005 baseline. Upon comparison of trends associated with employee opinion data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), OPM is currently developing the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals). After completion of these more objective measures, OPM will be able to set longer-term objective, outcome-oriented targets for the employee retirement readiness.

Measure: Measure: % of employees who have tried to figure out how much money they will need to have saved by the time they retire.

Explanation:Data source: Retirement Readiness Index Survey. In response to The Thrift Savings Plan Open Elections Act of 2004, OPM was directed to develop a strategy to "provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals". The initial study survey used a variety of demographic factors including age and income and career stage, was conducted between May and September 2005 through an Internet survey with 7,294 Federal workers. A stratified sample was used to obtain sufficient response from minority and lower-income groups. This measure focuses on the outcome of retirement financial education??how to calculate the retirement investment needed to meet retirement goals. Upon comparison of trends associated with employee opinion data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), OPM is currently developing the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals). After completion of these more objective measures, OPM will be able to set longer-term objective, outcome-oriented targets for the employee retirement readiness.

Measure: Measure: Improper Payment Rate

Explanation:The retirement program pays nearly $57.9 billion per year in defined pension benefits to most Federal retirees and their survivors and families. The program is comprised of the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). OPM reviews the retirement program payments to determine the improper payment rate embedded in its benefits payments. OPM reviewed pension and survivor cases over a span of nearly four decades. OPM stratifies the sample to adequately sample each the CSRS and FERS. Statistically valid samples were chosen proportional to payment size, because larger payments are more material to improper payment analysis than are small payments. Cases were selected from three randomly determined months. For each retirement system, 75 cases were selected for each of the three sample months, or 225 cases per retirement system, and 450 cases overall. Projections are based on a 95% confidence that the size of the improper payments was within the upper and lower estimates.

Measure: Measure: Interim annuity payment claims processing timeliness

Explanation:Number of calendar days between date a retirement application is received at OPM and the date interim payment is authorized. (HRPS)

Measure: Measure: CSRS annuity claims processing timeliness

Explanation:Number of calendar days between date a CSRS retirement application is received at OPM and the date the full annuity payment is authorized (HRPS). The retirement program aggressively reduced average process cycle time. OPM managers have set aggressive targets in FY 2006 to reduce the number of days necessary to produce the output units to within 30 days for 90 percent of initial claims. As 2006 average processing time for initial claims has been reduced to 31 days and to 21 days for survivor claims. The performance goals for cycle time in 2009 reflect very aggressive process targets. Retirement System Modernization will be fully implemented during 2008 and 2009 and cycle time goals will decrease even further.

Measure: Measure: FERS annuity claims processing timeliness

Explanation:Number of calendar days between dates a FERS retirement application is received at OPM and the date the full annuity payment is authorized (HRPS). The retirement program aggressively reduced average process cycle time. OPM managers have set aggressive targets in FY 2006 to reduce the number of days necessary to produce the output units to within 30 days for 90 percent of initial claims. As 2006 average processing time for initial claims has been reduced to 31 days and to 21 days for survivor claims. The performance goals for cycle time in 2009 reflect very aggressive process targets. Retirement System Modernization will be fully implemented during 2008 and 2009 and cycle time goals will decrease even further.

Measure: Measure: CSRS survivor annuity claims processing timeliness

Explanation:Number of calendar days between dates a CSRS retirement application is received at OPM and the date the full annuity payment is authorized (HRPS). The retirement program aggressively reduced average process cycle time. OPM managers have set aggressive targets in FY 2006 to reduce the number of days necessary to produce the output units to within 30 days for 90 percent of initial claims. As 2006 average processing time for initial claims has been reduced to 31 days and to 21 days for survivor claims. The performance goals for cycle time in 2009 reflect very aggressive process targets. Retirement System Modernization will be fully implemented during 2008 and 2009 and cycle time goals will decrease even further.

Measure: Measure: Claims processing unit cost

Explanation:The average direct cost per claim for all retirement and survivor annuity claims processed (HRPS). Achieving timeliness goals required a short-term tradeoff in Claims Processing unit cost. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same unit cost; thereby significantly increasing productivity. The key to reducing unit costs in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor in the process. Retirement System Modernization will be fully implemented during 2008 and 2009; and the investment will temporally increase unit cost. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions.

Measure: Measure: Customer service unit cost

Explanation:The average in-direct cost per non-claim customer transaction processed (HRPS). Achieving timeliness goals required a short-term tradeoff in Claims Processing unit cost. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same unit cost; thereby significantly increasing productivity. The key to reducing unit costs in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor in the process. Retirement System Modernization will be fully implemented during 2008 and 2009; and the investment will temporally increase unit cost. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions.

Measure: Measure: CSRS claims processing accuracy

Explanation:The % of CSRS retirement claims processed accurately (HRPS). Achieving timeliness goals required a short-term tradeoff in Claims Processing accuracy. A consequence of the focus on eliminating the backlog of some experienced processing review resources were temporarily shifted to processing from reviewing. Now that these efforts have yielded the desired result, resources have been returned to the reviewing process to improve accuracy rates. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same accuracy; thereby significantly increasing productivity. The key to increasing accuracy in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor in the process thereby reducing systemic human error. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions.

Measure: Measure: FERS claims processing accuracy

Explanation:The % of FERS retirement claims processed accurately (HRPS). Achieving timeliness goals required a short-term tradeoff in Claims Processing accuracy. A consequence of the focus on eliminating the backlog of some experienced processing review resources were temporarily shifted to processing from reviewing. Now that these efforts have yielded the desired result, resources have been returned to the reviewing process to improve accuracy rates. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same accuracy; thereby significantly increasing productivity. The key to increasing accuracy in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor in the process thereby reducing systemic human error. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions.

Measure: Measure: CSRS survivor annuity claims processing accuracy

Explanation:The % of CSRS survivor claims processed accurately (HRPS). Achieving timeliness goals required a short-term tradeoff in Claims Processing accuracy. A consequence of the focus on eliminating the backlog of some experienced processing review resources were temporarily shifted to processing from reviewing. Now that these efforts have yielded the desired result, resources have been returned to the reviewing process to improve accuracy rates. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same accuracy; thereby significantly increasing productivity. The key to increasing accuracy in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor in the process thereby reducing systemic human error. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions.

Measure: Measure: Call handling rate

Explanation:% of Retirement Program customer calls handled divided by the total call received.

Measure: Measure: % annuitants satisfied with overall retirement services

Explanation:The % of annuitants (retirees and survivor annuitants) generally or very satisfied with retirement program services since their annuity began. (HRPS)

Measure: Measure: The % of benefits officers trained per year.

Explanation:The % of benefits officers trained per year. During 2006 OPM implemented a training program for benefits officers so they could facilitate employee knowledge of health, retirement, and life insurance benefits and improve employee satisfaction with benefits programs. (HRPS)

Is the program purpose clear?

Explanation: The Federal civilian retirement program is designed to meet two purposes. The first is to provide Federal employees options and tools for their retirement planning to secure their families' financial future. The second is to serve as an important component of employee compensation and therefore support Federal agencies' recruitment and retention needs. The program consists of two retirement plans that cover over 90% of all Federal civilian employees: the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). CSRS was established in 1920 as a way to retire older employees from the civil service. CSRS was established prior to Social Security and Federal employees covered under CSRS are generally not covered by Social Security for their Federal service. (See Section 1.3 for discussion of offset provision for those employees covered under both CSRS and Social Security). Newly-hired Federal employees came under Social Security by reason of the Social Security Amendments of 1983. This provided the impetus for a review of the Government's retirement structure, leading up to the establishment of FERS with its three-tier approach to retirement benefits. In 1986, CSRS was closed to new entrants and FERS was established to incorporate the Federal Government's updated purposes for the retirement program.

Evidence: Section 100A of Public Law 99-335, the legislation establishing the Federal Employees' Retirement System (FERS). SEC.100A. PURPOSES The purposes of this Act are' (1) to establish a Federal employees' retirement plan which is coordinated with title II of the Social Security Act; (2) to ensure a fully funded and financially sound retirement plan for Federal employees; (3) to enhance portability of retirement assets earned as an employee of the Federal Government; (4) to provide options for Federal employees with respect to retirement planning; (5) to assist in building a quality career workforce in the Federal Government; (6) to encourage Federal employees to increase personal savings for retirement; and (7) to extend financial protection from disability to additional Federal employees and to increase such protection for eligible Federal employees.

Does the program address a specific and existing problem, interest, or need?

Explanation: As part of the Government's overall employee compensation package, FERS addresses two needs. 1) To provide Federal employees options and tools for retirement planning for their and their families' financial future. FERS provides options for Federal employees with respect to retirement planning by providing a range of investment options for their Thrift Savings Plan. 2) To serve as an important component of employee compensation and therefore support Federal agencies' recruitment and retention needs. In order to fulfill these needs, it was necessary for FERS to be designed to provide the benefits that are expected by employees and that are generally provided by other large employers. These include benefits after normal retirement, in the case of premature inability to work due to disability, and upon death. While the private sector does not always provide these in the same manner as FERS, the Congress made the policy determination that these would be incorporated in the three-tier FERS structure. Since two-thirds of the ERISA (private sector) workforce is covered by employer-sponsored retirement plans, the Government must offer this benefit to Federal employees or it would be at a competitive disadvantage in the human capital marketplace.

Evidence: FERS and CSRS are an important component of the Government's overall compensation package that helps make the Government a competitive employer. OPM's 2006 Federal Human Capital Survey (FHCS) found that retirement benefits were ranked second in importance by respondents among the components of the employee compensation and benefits package. A 2006 OPM Client Satisfaction Survey revealed that the availability of retirement and insurance benefits influenced the decision of 70% of respondents to pursue a career with the Federal Government.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: The CSRS and FERS retirement programs are unique pension programs available solely to Federal employees and do not duplicate other Federal, state or local retirement benefit programs; other retirement programs are available to specific employee groups. All non-temporary employees are automatically included upon employment. Employees are eligible for retirement benefits if they meet specified vesting requirements depending upon program. While the benefit structures are different under CSRS and FERS, various provisions of Social Security and retirement law act in concert to prevent duplicated or overlapping benefit coverage. For individuals under CSRS (i.e., those without concurrent Social Security coverage), two provisions of Social Security law serve to prevent inappropriately excessive combined benefits. First, since Social Security benefits are based on a lifetime average salary that is artificially reduced by years of zero Social Security earnings during which a CSRS covered employee is earning a separate CSRS benefit, the Windfall Elimination Provision (WEP) modifies the Social Security benefit formula to account for this factor. Second, since under Social Security, spousal benefits (whether during life or after death) are offset by an individual's own earned benefit, the Public Pension Offset (PPO, sometimes referred to as the Government Pension Offset or GPO) provides for an offset from Social Security spousal benefits based on that individual's own earned CSRS annuity. Some individuals are concurrently covered by CSRS and Social Security, with reduced CSRS employee contributions under coverage known as CSRS Offset. In addition to the WEP and PPO, individuals covered by CSRS Offset (or their survivors) are subject to a reduction in their CSRS benefit based upon the portion of their Social Security benefit derived from the concurrently covered service. The FERS structure was explicitly designed to operate in conjunction with Social Security and Thrift Savings Plan benefits. Indeed, the impetus for the creation of FERS was the Social Security Act Amendments of 1983 which mandated Social Security coverage for new Federal employees. While the FERS structure is generally designed with the intent that combined benefits will be paid, there are provisions for offset of disability benefits upon receipt of Social Security disability benefits. The CSRS, FERS, and Federal Employees Compensation Act (FECA) statutory provisions are designed to prevent overlapping benefit payments. (FECA is the worker's compensation program for federal employees). While FECA payments for medical expenses and loss of (or loss of use of) body parts can be paid in addition to CSRS or FERS benefits, that is not true for FECA loss of earning capacity payments. Individuals may apply for both FECA loss of earning capacity payments and CSRS or FERS retirement benefits (either disability or other type), but must elect which benefit to receive for any particular period of time. This both prevents double benefits payments, and accounts for the fact that an individual's level of FECA benefits may change. Similarly, in the case of an employment related death, survivors must elect whether to receive FECA or retirement benefits.

Evidence: The Public Pension Offset Provision for wives: section 402(b)(4) of title 42, United States Code. The Public Pension Offset Provision for husbands: section 402(c)(2) of title 42, United States Code. The Public Pension Offset Provision for widows: section 402(d)(7) of title 42, United States Code. The Public Pension Offset Provision for widowers: section 402(e)(2) of title 42, United States Code. The Windfall Elimination Provision: section 415(a)(7) of title 42, United States Code. The provision requiring offset of Social Security benefits from FERS disability annuities: section 8452(a) of title 5, United States Code. The provision requiring offset of Social Security benefits for periods of CSRS Offset service: section 8349 of title 5, United States Code. The statutory provision prohibiting dual receipt of CSRS and OWCP benefits: section 8337(f) of title 5, United States Code. The provision prohibiting dual receipt of FERS and OWCP benefits: section 8464a of title 5, United States Code. The Committee reports on the legislation that became FERS are clear that FERS was designed and intended to be integrated with Social Security. (S. Rep. No. 99-166 (1985) at page 6 notes that FERS 'sets up a complete retirement program to coordinate with Social Security. It captures some of the best features of pension plans frequently used by private industry to supplement Social Security. The three tiers of FRS [sic]'Social Security, defined benefit, and the defined contribution or thrift plans are combined to offer a sound retirement program which provides considerable career flexibility and involvement in financial decision making for Federal employees.")

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: There are no major flaws that would limit the Retirement Program's effectiveness or efficiency beyond those process changes designed to keep pace with private sector practices. The Retirement Systems Modernization investment was a response to an increased retirement program demand associated with projected increased retirement case workload and the need to modernize business processes RSM includes reengineering of the business processes used to determine an employee's annuity, providing a comprehensive view of Federal employment history and tools to employees and processing staff, acquiring the technology to support them, and aligning the Federal retirement practice to redesigned processes. With RSM, agencies will be able to provide OPM with retirement and other data on a recurring basis and will ensure a current view of each participant's defined benefit retirement account, while virtually eliminating paper-based processes. RSM will use automated calculations of retirement benefits and will likely reduce erroneous retirement payments. OPM directly pays benefits to beneficiaries legally entitled to retirement benefits under the various laws governing the Program. By having OPM, rather than individual agencies, directly provide benefits to nearly 2 million beneficiaries, OPM ensures proper and fair application of the laws and regulations governing the Retirement Program. CSRS pre-dates the Social Security system and was created to separate older employees from the civil service. It is a defined benefit plan and covers employees hired prior to 1984. FERS was created after the Social Security Amendments of 1983 brought all federal employees hired after 1983 under Social Security. FERS adopted a different approach to plan design, more like private sector plans, including defined benefit (annuity) and contribution components (TSP) in addition to Social Security. Internal and external audits have found no major flaws pertinent to efficiency or effectiveness of the Retirement Program.

Evidence: OPM's Quality Assurance Group has conducted numerous evaluations of the Retirement Program's activities and internal controls and has found no major flaws in recent years. Additionally, KPMG, under contract with OPM's Inspector General, evaluates the Retirement Program's benefit payments and internal controls as a component of its annual review of OPM's financial statements and has found no major flaws in recent years. Analysis of the CSRS retirement system in the early '80s, coupled with changes in the labor market, and the need for flexibility in benefit design and delivery, led to the creation of a defined contribution plan as part of FERS in 1984. FERS, with its three-tier approach to providing benefits, resolved the critical flaws existing in the CSRS system. During the gestation of FERS, S. Rep. No. 99-166 (1985) included a finding that 'the cost and benefits of S. 1527 [an early version slightly more expensive than FERS as actually enacted] are comparable to those offered by most private sector companies, thus enabling the Government to compete with private industry for talent by providing attractive benefits while holding down costs to a reasonable level.'

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: OPM offers FERS and CSRS coverage only to Federal employees who are enrolled by virtue of their employment status, and whose coverage is reviewed by their employing agencies. The statutory provisions for entitlement to benefits are detailed and specific. Under applicable law, benefits are paid directly to individuals (or to a responsible party in the case of legal or medical incapacity) who meet the statutory requirements for retirement benefits, as determined by OPM. In response to The Thrift Savings Plan Open Elections Act of 2004, OPM was directed to develop a strategy to "provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals". OPM encourages effective targeting of Retirement Program resources through its educational / information campaigns to ensure that employees have the tools and knowledge for retirement planning for their and their families' financial future. OPM is also undertaking a series of Financial Education Fairs designed to: increase Federal employees' awareness of the Federal benefits programs; provide financial education information to employees; and, develop a template for the agencies to use as a model to use in promoting the financial literacy of their employees. These employee education efforts focus on the outcomes of retirement financial education??to provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet retirement goals. Retirement readiness combines basic information about the benefits provided by the Government, as an employer, and the broader financial education needs of employees. Rather than being a "near retirement" event, the retirement readiness model considers retirement financial literacy and education as a career-long process. The model incorporates the broad range of information employees need to help them make informed retirement planning decision. It also recognizes that these needs change as a person moves through his or her career. In addition, OPM contracted out a study to focus on improving the retirement readiness of Federal employees to ensure that employees have the tools and knowledge for retirement planning for their and their families' financial future. Through a contract with the International Foundation for Retirement Education (InFRE), a not-for-profit organization, OPM developed and administered the Retirement Readiness Index Survey. This measure focuses on the outcome of retirement financial education??to provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals. The initial survey and data established a performance baseline. Upon comparison of trends associated with employee opinion data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), and OPM development of the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals). After completion of these more objective measures, OPM will be able to re-assess more direct outcome-oriented targets for the employee retirement readiness. RSM will provide the tools that will permit employees to model retirement benefits based on a complete set of their actual Federal employment information.

Evidence: Retirement Program benefits are effectively targeted and reach the intended beneficiaries: OPM's total overpayments as a percent of benefits paid remain remarkably low, with a 0.44% overpayment rate out of total benefits paid of $57.9 billion dollars for 2003. The Conference Committee Report (House of Representatives Report 108-10) on H.J.Res.2, the "Consolidated Appropriations Resolution, 2003" approved 2/20/03 as P.L. 108-7 identified the need to 'to establish a methodology to examine the real rate of Americans' 'retirement readiness' and to develop a retirement education model.' Retirement readiness combines basic information about the benefits provided by the Government, as an employer, and the broader financial education needs of employees. Rather than being a "near retirement" event, the retirement readiness model considers retirement financial literacy and education as a career-long process.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: To ensure the retirement program focuses on outcomes, OPM considered employer primary objectives i.e., to provide Federal employees tools for retirement planning and serve as an important component of employee compensation so the government can recruit and retain quality Federal employees in the development of long-term performance measures. The long term measures address whether retirement program provides "effective" services to the current & retired Federal employees. The long term outcome measures address whether the program provides a logical link toward recruitment and retention. The retirement readiness measures show the employees perceive they are ready for retirement i.e., OPM ensures the retirees' plan for their financial futures. OPM has developed measures that assess employee attitudes of the value of their retirement annuity and thrift savings benefits and impact to their decision to either accept Federal employment to stay employed with the Federal Government. The first six of OPM long-term measures are administered through the Federal Benefits Survey. The Federal Benefits survey was administered in 2004 and 2006. The purpose of the survey was to measure employees' attitudes about the importance, value and competitiveness of the benefits programs with regards to recruitment and retention. This was the initial survey and the survey 2004 survey data established an initial survey baseline. In response to The Thrift Savings Plan Open Elections Act of 2004, OPM developed measures to evaluate performance towards a strategy to "provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals". OPM developed and administered the Retirement Readiness Index Survey. This measure focuses on the outcome of retirement financial education??to provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals. The initial survey and data established a performance baseline. Upon comparison of trends associated with employee opinion data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), and OPM development of the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals). After completion of these more objective measures, OPM will be able to re-assess more direct outcome-oriented targets for the employee retirement readiness.

Evidence: The Federal Benefits Survey, (FY 2006). See measures tab for description of long term measures (PART FY 2004 and FY 2007). Benefits Administration Letter Number: 06-105, Retirement Readiness Employee Survey Results, Office of Personnel Management, (June 2006). See measures tab for description of long term measures targets and timeframes. (FY 2004 and FY 2006)

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: OPM has baselines and targets for its long-term measures for the retirement program. These targets are not considered ambitious as they do not indicate significant program improvement from the baseline, and are not complete for all measures. The first six of OPM long-term measures, administered through the Federal Benefits Survey, measure employees' attitudes about the importance, value and competitiveness of the benefits programs with regards to recruitment and retention. During FY 2004, OPM developed and administered the Federal Benefits Survey and established baselines for two of the long-term measures. In FY 2006, the program again administered the survey collecting more current data for these two measures. OPM conducted focus groups to evaluate the differences between the FY 2004 and FY 2006 results and to explore employee benefit preferences. The Federal Benefits Survey administered in 2006 revealed no change from 2004 in new hires placing importance on retirement benefits in accepting a Federal job and a 3 point increase for employees who say retirement benefits are important in their decision to remain in the Federal government. (The margins of error reported at the 95% confidence interval, which is the common standard for an estimate of 50% from the survey would be approximately +/- 5% for new hires and +/- 4.4% for current employees.) After RSM is in place, OPM plans to test various programmatic alternatives and associated impact against each of the factors; then we will be able to set objective and more aggressive outcome-based targets. The retirement readiness index long term measures focuses on the outcome of retirement financial education??to provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals. The initial survey and data established a performance baseline for the population of 1.8 million civilian employees. The data for baseline survey show Federal employees perceive they are ready for retirement compared to non-federal employees. Upon comparison of trends associated with employee opinion data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), and OPM development of the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals), OPM will be able to set aggressive long-term outcome-oriented targets for the employee retirement readiness.

Evidence: Source data: The Federal Benefits Survey conducted in FY 2004 and subsequent measurement and analysis in FY 2006. The Retirement Readiness Employee Survey was conducted in 2005. See measures tab for targets and timeframes, results of FY 2004 and FY 2007. All long term measures have targets through 2012. Federal Benefits Survey and the Retirement Readiness Employee Survey. Benefits Administration Letter Number: 06-105, Retirement Readiness Employee Survey Results, Office of Personnel Management, (June 2006)

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The retirement program's annual measures directly relate to the legal requirement to provide "timely and accurate" payments to Federal employees. Section 8345 (CSRS) and 8463 (FERS) of title 5 of the United States Code provide generally that each annuity is stated as an annual amount, one-twelfth of which, rounded to the next lowest dollar, constitutes the monthly rate payable on the first business day of the month after the month or other period for which it has accrued." These are substantive provisions of law and their requirements may not be waived at the discretion of the agency or the courts. The timely and accuracy speak the fundamental moral imperative of providing "effective" services to the current & retired Federal employees. If OPM didn't pay the employees their correct retirement within a reasonable time, then the Federal government would not be satisfying it's obligations as an employer. The annual measures address the long-term program goal that OPM is efficiently (annual efficiency measures) delivering services that meet the government's inherent moral responsibilities of an employer and steward of taxpayer resources and whether OPM is meeting the changing demand (annual output measures). OPM has established annual measures to demonstrate efficient progress towards achieving the retirement program's long-term goals of providing Federal employees options and tools for retirement planning for their and their families' financial future and serving as an important component of employee compensation and therefore supporting Federal agencies' recruitment and retention needs. For FY 2006, OPM made substantial progress in improving its performance in processing retirement annuity claims compared to past years. For FY 2005, the processing timeliness for CSRS and FERS annuity cases were 80 and 93 days respectively. For FY 2006, the retirement program significantly reduced average process cycle time to 30.6 days. Achieving timeliness goals required a short-term tradeoff in Claims Processing Accuracy (CSRS & FERS). A consequence of the focus on eliminating the backlog of claims and reducing average processing time by two-thirds, some processing review resources were temporarily shifted to processing from reviewing. Now that these efforts have yielded the desired result, resources have been returned to the reviewing process to improve accuracy rates. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same unit cost; thereby significantly increasing productivity. OPM's Quality Assurance Program monitors various claims processing functions to evaluate the efficiency and effectiveness of our retirement program. OPM recently implemented an additional PART measure??percent of benefits officers trained annually. OPM developed a survey (6 items) sent directly to the population of benefits officers (approximately 1600). OPM collected baseline data in second quarter FY 2006 and will collect updated data annually.

Evidence: See measures tab for description of annual measures targets and timeframes. (PART FY 2004 and FY 2007). All annual measures have targets through 2009.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: OPM has baselines and ambitious targets for its annual Retirement Program measures. Since 2004, OPM has made significant progress in efficiency based on incremental improvements. The implementation of Retirement Systems Modernization will transform the way OPM provides retirement benefit services. OPM retirement services will transform from a labor-intensive paper-based process to a more robust self-help and advisory service model. Data used for performance measurement (i.e., claims timeliness and accuracy) is collected regularly (monthly) and shared with program managers on an ongoing basis to improve operational performance. OPM retirement program has significant historical baseline data for annual performance measures. OPM performance analysts draw workload data and labor hour cost data from existing management information systems. The data is analyzed and presented to retirement program managers via a web-based decision support system called the Hypershow. Retirement program managers meet to allocate program resources in response to workload demand to meet performance targets within cost constraints. Labor cost remains the primary cost driver of the retirement claims processing. OPM managers employ timeliness measures to track the overall cycle time for the major categories of retirement claims. Based upon the historical cycle time data, OPM managers have set aggressive targets in FY 2006 to reduce the number of days necessary to produce the output units to within 30 days for 90 percent of initial claims. As of August 12, 2006, average processing time for initial claims has been reduced to 31 days and to 21 days for survivor claims. The key to reducing unit costs in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor in the process. The performance goals for cycle time in 2009 reflect very aggressive process targets. Retirement System Modernization will be fully implemented during 2008 and 2009; and the investment will temporarily increase unit cost. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions. The call handling rate--with the implementation of RSM, call handling will no longer be tracked and reported as a performance indicator; and a new metric will need to be developed.

Evidence: See measures tab for description of long term measures targets and timeframes. (PART FY 2004 and FY 2007).

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Though OPM operates the vast majority of the retirement benefit processing program in-house, any program partners we work with in those operations are held accountable through contractual requirements to meet annual performance goals for the standards OPM has set. For example, OPM uses a contractor to handle overflow customer service phone calls, and this contractor is held accountable for meeting contractual performance standards. On a broader level, every agency or organization with employees covered under CSRS or FERS is a partner, and our programs cannot be operated without their active cooperation and assistance. We have extensive programs to ensure that we work together with employing agencies to achieve both short-term and long-term goals. For example, Agency Benefits Officers partner with OPM in our efforts to increase the education of employees on retirement benefits. Agencies conduct mid-career and Pre-retirement seminars for their employees during which time information is provided about their benefits into retirement. OPM provides training on the retirement program to the Agency Benefits Officers who in turn educate their employees. OPM provides training annually and also conducts quarterly meetings with benefits officers to keep them up to date on current issues. Our Benefits Officer Training and Development Group is the hub of an extensive program, including statutorily mandated agency-level retirement counselors at all agencies, to provide training and information to agency human capital management staff for further dissemination to all employees, as well as to provide feedback to OPM as to agency and employee needs and concerns. Other parts of OPM actively work to ensure that program operational needs requiring inter-agency cooperation, such as accounting, record keeping, and information transfer, are efficiently and effectively met. Additionally, OPM has developed an index to assess the retirement readiness of Federal employees. The Retirement Readiness Index (RRI) identifies what Federal employees should know as well as what action they should take, and by when, to adequately plan for retirement. The project also identifies education programs and models of best practices to improve retirement readiness. OPM will use this information to educate employees about retirement as a whole, and the Thrift Savings Plan and Social Security in particular. Further, we actively work with those agencies administering programs that interface with the retirement programs, such as the Department of Labor (workers' compensation for federal employees), the Social Security Administration, the Federal Retirement Thrift Investment Board (Thrift Savings Plan), and Department of the Treasury (payment disbursement). Only through such coordinated action can the Government's larger needs be satisfactorily addressed.

Evidence: As an example of inter-agency cooperation, OPM worked closely with the Department of Labor in developing the Administration's proposal to reform the workers' compensation provisions applicable to individuals who reach retirement age without a recovery from their disabling conditions. OPM has obligated funds to handle the overflow of Retirement Program customer telephone calls through outside contractor support. Since FY 2003, OPM has maintained the capacity to answer 25,000 additional calls each month through the contractor, which increases customer satisfaction and call handling rates, indicators that OPM tracks on an annual basis.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: OPM has laid the groundwork for progressive research and is developing new approaches in the research domain of employer retirement programs. The nature of the retirement program assumes all eligible beneficiaries are entitled by law (not discretion) to receive retirement benefits; also, the very outcome of retirement readiness is largely a function of each employee's personal responsibility to save enough for retirement. Therefore, measuring OPM's contribution to the ultimate outcome of employee readiness with respect to income replacement is largely "inseparable" from employee behavior. Measuring the impact of "separable" OPM programmatic activity would require extensive primary research in the field of national financial preparedness and literacy; such a study is currently unaffordable and infeasible. Such a study would require fully automated human resource records for each employee; OPM's efforts with RSM and Enterprise Human Resources Information (EHRI) data warehouse and data mart systems will provide the underlying employee data necessary to develop outcome-based recruitment and retention analytics. Additionally, Literature Review raised the caveat and highlighted a gap in available academic literature that utilized broad HR measures (such as turnover rates and recruiting costs) appear to have limited utility in complying with the requirements of PART rigorous quality. Therefore, the focus of feasible alternatives to OPM's evaluation of program effectiveness was on ensuring independent evaluations are of comprehensive scope and quality (given current affordability constraints) to demonstrate the program is effective and is achieving results and to improve the program. The program evaluation therefore focuses measures on the employee's interaction with the retirement program annually through the employee benefit survey. Though no single source of rigorous research exists presently, OPM developed a Strategic Framework encompassing a comprehensive group of three dimensions relevant to assessing retirement program performance: 1.) Employer objectives: OPM measures support for an agency's underlying justification for maintaining the retirement program??provide Federal employees tools for retirement planning and serve as an important component of employee compensation so the government can recruit and retain quality Federal employees. a.) OPM has benchmarked Federal retirement programs with private industry and State government programs (2005). b.) OPM conducted an independent study to improve the retirement readiness of Federal employees. c.) During FY 2006, OPM established a baseline and set long-term targets for the Retirement Readiness Index: Percent of employees who are at the appropriate stage of retirement planning. 2.) Customer satisfaction: OPM consider the need of the employees and retirees in evaluating retirement planning services. OPM conducted an employee benefit survey to measure employee and annuitant satisfaction with their retirement benefits. 3.) Program efficiency: OPM currently collects retirement services quality data such as claims processing timeliness, claims processing unit costs, call handling rate, the customer calls handled, and the customer service unit costs. OPM uses such operational measures in quarterly performance management reviews to allocate resources based upon anticipated changes in demand. OPM will conduct the following program evaluation efforts in fiscal year 2008: Establish baseline for measure of income adequacy of coverage in conjunction with life insurance benefits (2008); test retirement readiness of specific employee groups by conducting exit survey on income adequacy (2008); and, measure employee satisfaction/communication via use of the Internet (2008).

Evidence: The Retirement Prospects of the Baby Boomers, Congressional Budget Office (March 2004) Retirement Age and the Need for Saving, Congressional Budget Office (May 2004) Benchmarking study to determine how Federal benefits compare to those offered by private sector employers. U.S. OPM benefits Benchmark Study Results (June, 2005) Measurement Methodologies Available for Employee Benefit Plans: Findings from Literature Review, Office of Personnel Management (December 2005). Benefits Administration Letter Number: 06-105, Retirement Readiness Employee Survey Results, Office of Personnel Management, (June 2006).

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: OPM administers the Civil Service Retirement and Disability Fund (CSRDF, 24X8135) for Federal employee earned benefits. The fund pays the costs of administering these benefit programs, including overhead costs. Each year OPM receives a statutorily set Limitation on Transfers from Trust Funds in OPM's Congressionally-approved appropriation to pay the salaries of OPM employees and other costs of operations. At the beginning of each quarter, CFS staff bills for and collects from the Trust Fund to cover the overhead costs. Retirement benefit levels are statutorily determined so budget requests are based largely on anticipated outlays to retirees. Administrative expense requests are based on costs of benefit delivery and customer service standards. OPM's CBJ/PB allocates budgetary resources by strategic goal. These three strategic goals link directly to long-term and annual performance goals, and include efficiency measures that integrate performance, outcome, output, and past results for each major activity. Specifically, OPM's CBJ/PB includes funding requests for the Retirement Program in the areas of policymaking (which contain our LT goals regarding recruitment and retention), Agency liaison activities (which contain our LT goals regarding providing tools for retirement planning) and service delivery (which contain LT and annual goals for customer service). The performance measures have established targets that show the level of performance that can be achieved at the requested level of funding. As OPM proposes program changes, based on ongoing and planned studies, they will adjust budget requests accordingly. The retirement program considers the total cost of operations when planning for and developing operating budgets. OPM accounts for indirect or common costs for those support services that are provided to OPM program offices. Common services include executive management direction provided by the Office of the Director, and such central functions as legal counsel, financial management services, personnel, contracting, facilities, publications, Congressional relations, EEO, security and communications. The OPM Center for Financial Services Budget Office develops these common services costs and builds them into OPM annual budget estimates. These are submitted to OMB annually.

Evidence: See measures tab (PART FY 2004 and FY 2007). See OPM FY 2005 and FY 2006 CBJ Congressional Budget Justification??Performance Budget for retirement program total cost breakout. The indirect costs of providing these agency-wide services are initially charged to "short codes", fund codes established to track individual funding activity within a given appropriation. In this instance, common services is represented by Fund 1C and is paid from the Salaries and Expenses (S&E) Account (Treasury Appropriation Fund Symbol (TAFS) 24_0100), and then reimbursed by the programs. In terms of cost effectiveness, Retirement Program administrative costs are very low: less than 1% of claims paid.

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: OPM has revised its performance measurement strategy, including new performance indicators that better address the Retirement Program purposes. To collect data for these long term measures, OPM implemented a survey of new and existing employees (Federal Benefits Survey). Also, OPM contracted for and conducted a benchmarking study to assess how OPM's benefits programs, including retirement, compare with those benefits offered by private sector employers. OPM issued an RFI and conducted a study on how to best design independent evaluations to assess the performance of each of OPM's benefits programs, including Retirement, against the program purposes. OPM developed an index to assess the retirement readiness of Federal employees. The main goal of the Retirement Readiness Index is to create an awareness of what is needed for individuals to successfully plan and prepare for retirement, from both a financial and personal perspective. This RRI identifies what Federal employees should know as well as what action they should take, and by when, to adequately plan for retirement. The project also identifies education programs and models of best practices to improve retirement readiness. OPM developed and administered the Retirement Readiness Index Survey. The initial survey and data established a performance baseline. Upon comparison of trends associated with employee opinions data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), and OPM development of the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals), OPM will be able to set longer-term objective, outcome-oriented targets. OPM developed a Strategic Framework encompassing a comprehensive group of three dimensions relevant to assessing retirement program performance: Employer objectives, Customer satisfaction and Program efficiency. In addition to recent efforts to address strategic planning deficiencies, OPM is implementing a Retirement Systems Modernization (RSM) project that will allow OPM to maintain current service levels to retiring employees, keep up with customer expectations, and manage the workload associated with significant increases in the FERS retirement annuitant population. RSM is expected to be fully implemented by 2009. RSM in combination with Enterprise Human Resource Information data mart will provide the capability to develop true business intelligence and programmatic analytics and will enable effective program planning and execution.

Evidence: Benchmarking study to determine how Federal benefits compare to those offered by private sector employers. U.S. OPM benefits Benchmark Study Results (June, 2005). How to best design independent evaluations to assess the performance of OPM's benefit programs including the retirement program. Measurement Methodologies Available for Employee Benefit Plans: Findings from Literature Review (December 2005). Measurement Methodologies Available for Employee Benefit Plans: Findings from Literature Review, Office of Personnel Management (December 2005). Benefits Administration Letter Number: 06-105, Retirement Readiness Employee Survey Results, Office of Personnel Management, (June 2006).

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: OPM collects performance data related to long-term and annual performance measures to manage program results and to improve performance. Data used for performance measurement (i.e., claims timeliness and accuracy) is collected regularly (monthly) and shared with program managers on an on-going basis to improve operational performance. Claims processing to date remain a paper-based, labor-intensive work process. The Retirement Program assesses the efficiency and cost effectiveness through a number of performance measures. For example, customer satisfaction surveys allow OPM to gauge program outcomes, such as how satisfied retirees and survivors are with the quality of service. Another major quality attribute, cycle time of initial claims is a leading indicator of customer satisfaction; our managers continuously balance the competing demands of decreasing cycle time while conducting operations within budget. OPM performance analysts draw workload data and labor hour cost data from existing management information systems; the data is analyzed and presented to retirement program managers via a web-based decision support system called the Hypershow. Retirement program managers meet to allocate program resources in response to workload demand to meet performance targets within cost constraints. Labor cost remains the primary cost driver of the retirement claims processing. OPM managers employ timeliness measures to track the overall cycle time for the major categories of retirement claims. The Retirement program balances uneven workload call volume through the use of an overflow calls contract. The performance based contract performance parameters specify the contractor performance for more than the contractually required 25,000 call per month during peak seasonal periods, and less during non-seasonal periods. OPM has established annual measures to demonstrate efficient progress toward achieving the retirement program's long-term goals of providing Federal employees options and tools for retirement planning for their and their families' financial future and serving as an important component of employee compensation and therefore supporting Federal agencies' recruitment and retention needs. The annual measures address long-term program goal that OPM is efficiently (annual efficiency measures) delivering services that meet the government's inherent moral responsibilities of an employer and steward of taxpayer resources and whether OPM is meeting the changing demand (annual output measures). OPM also maintains performance-based contracts relating to customer service and claims services that reference statistically based requirements thresholds. Externally, OPM incorporates performance measures for program partners and sets performance parameters through agreements or memoranda of understanding. These arrangements with other federal agency benefit programs allow us to share data and ensure that benefits are paid timely and accurately. Further, because of the overlapping nature of benefits entitlement, we are able to use these data matches to readily determine whether dual benefits are payable, whether benefits are being paid consistent with our enabling statues, and whether fraud, waste and abuse can be identified and deterred. OPM coordinates with the Labor Department, Military Retired Pay Centers, Foreign Service, Railroad Retirement, etc., to identity and recover prohibited dual retirement benefits.

Evidence: OPM made substantial progress in improving its performance in processing retirement annuity claims compared to past years. For FY 2005, the processing timeliness for CSRS and FERS annuity cases were 80 and 93 days respectively. For FY 2006, the retirement program significantly reduced average process cycle time to 30.6 days. Achieving timeliness goals required a short-term tradeoff in Claims Processing Accuracy (CSRS & FERS). A consequence of the focus on eliminating the backlog of claims and reducing average processing time by two-thirds, some processing review resources were temporarily shifted to processing from reviewing. Now that these efforts have yielded the desired result, resources have been returned to the reviewing process to improve accuracy rates. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same unit cost; thereby significantly increasing productivity.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Each Manager's individual performance plans identify long-term and short-term program standards and objectives that stress measurable results. OPM program managers monitor progress toward achieving goals and organizational objectives; and implement performance management practices that align program objectives with organizational goals and deploy program performance down to the lowest level through individual performance plans to ensure the retirement program is aligned with organizational objectives. OPM retirement program managers use a quarterly reporting system to hold managers accountable for spending, schedule, and performance. Managers' report planned versus actual data for financial and performance information. Program managers are held accountable for specific performance relative to the standard. OPM's overflow calls contractor is held accountable through contractual requirements to meet workload volume and call answer timeliness standards set by OPM. Insufficient evidence was provided to show that managers are being held accountable for accomplishment of the PART targets.

Evidence: Quarterly financial and performance reports. Performance appraisals provided in conjunction with quarterly President's Management Agenda deliverables to OMB. Contract performance standards with program partners NCS Pearson (the Open Season contractor) and Spherix (the overflow telephone contractor).

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: OPM's Federal Financial Management System is a transaction driven system that permits both budgetary and proprietary accounts to be recorded in a timely manner consistent with the resource needs of the Program. Additionally, procedures exist for reporting actual expenditures, comparing them against intended use, and taking timely and appropriate action to correct single audit findings when funds are not spent as intended. Additionally, OPM is developing cost accounting metrics throughout the agency to provide a closer link between costs and performance for all programs.

Evidence: OPM's Retirement Trust Fund financial statements. In FY 2006, Retirement Programs paid $57.9 billion in payments to `beneficiaries. OPM IG audits and annual independent financial audits serve to verify that funds are spent for the intended purpose. OPM's IG and retirement program offices work both independently and collaboratively to investigate allegations of fraud, waste and abuse and take corrective action where necessary. Erroneous payments remain extremely low at less than 0.44%.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: To ensure the retirement program focuses on outcomes, OPM considered employer objectives in the development of long-term performance measures. The long term measures address whether the retirement program provides "effective" services to current and retired Federal employees. The long term outcome measures address whether the program provides a logical link toward recruitment and retention. The retirement readiness measures show that employees perceive they are ready for retirement i.e., OPM ensures the retirees' plan for their financial futures. Additionally, OPM has established annual measures to demonstrate efficient progress toward achieving the retirement program's long-term goals of providing Federal employees options and tools for retirement planning for their and their families' financial future and serving as an important component of employee compensation and therefore supporting Federal agencies' recruitment and retention needs. The annual measures address long-term program goals that OPM is efficiently (annual efficiency measures) delivering services that meet the government's responsibilities of an employer and steward of taxpayer resources and whether OPM is meeting the changing demand (annual output measures). OPM program managers have used these historical effectiveness and efficiency measures to develop strategic alternatives and leverage computer and web-based technology to automate select paper-intensive processes to reduce costs & increase service quality (known as Retirement Systems Modernization, RSM). In addition to recent efforts to address strategic planning deficiencies, OPM is implementing a Retirement Systems Modernization (RSM) project that will allow OPM to improve service levels to retiring employees, keep up with customer expectations, and manage the workload associated with significant increases in the FERS retirement annuitant population. RSM is expected to be fully implemented by 2009. RSM in combination with Enterprise Human Resource Information data mart will provide the capability to develop true business intelligence and programmatic analytics and will enable effective program planning and execution.

Evidence: See "measures" tab for efficiency indicators and targets. Additionally, OPM has explored alternative solutions to delivering Retirement Systems Modernization. The approved plan utilizes Licensed Technology, which involves the licensing of integrated, proven, defined-benefit technology solutions. This solution is currently being implemented, and should be fully operational by 2009. RSM will markedly improve services to annuitants and employees.

Does the program collaborate and coordinate effectively with related programs?

Explanation: OPM collaborates with other programs to ensure that Federal benefits aren't duplicated, to avoid/reduce erroneous payments, and to inform employees about the benefits each agency manages and administers. Statutory provisions require benefit coordination between retirement benefits and several other programs, including Social Security (SS) disability benefits and FERS disability benefits, Federal Employees Compensation Act benefits, military retirement, Railroad Retirement, Foreign Service Retirement, and other federal retirement programs. On a broader level, every agency or organization with employees covered under CSRS or FERS is a partner, and our programs cannot be operated without their active cooperation and assistance. We have extensive programs to ensure that we work together with employing agencies to achieve both short-term and long-term goals. For example, Agency Benefits Officers partner with OPM in our efforts to increase the education of employees on retirement benefits. Other parts of OPM actively work to ensure that program operational needs requiring inter-agency cooperation, such as accounting, record keeping, and information transfer, are efficiently and effectively met. Further, we actively work with those agencies administering programs that interface with the retirement programs, such as the Department of Labor (workers compensation), the Social Security Administration, the Federal Retirement Thrift Investment Board (Thrift Savings Plan), and Department of the Treasury (payment disbursement). Only through such coordinated action can the Government's larger needs be satisfactorily addressed. As an example of inter-agency cooperation, OPM worked closely with the Department of Labor in developing the Administration's pending proposal to reform the workers' compensation provisions applicable to individuals who reach retirement age without a recovery from their disabling conditions.

Evidence: OPM has data-matching agreements with DoD, Labor, SSA, VA and Railroad Retirement Board to avoid or reduce erroneous payments, and participates in Treasury's Death Notification Entry System to reclaim overpayments from financial institutions.

Does the program use strong financial management practices?

Explanation: An independent financial accounting firm audits the program each year. Actuarial valuations of the program are also subject to an annual independent audit.

Evidence: OPM has received "unqualified" audit opinions in FYs 2000-2006. Data-matching agreements and computer matching with other benefit-paying programs (e.g. SSA, DoD, VA) and Treasury are used to avoid or reduce erroneous payments. OPM's improper payment rate (total of both over and underpayment) remains very low, at just 0.44% out of total benefits paid of $57.9 billion dollars for 2006.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: OPM contracts with an independent financial accounting firm, KPMG, to audit the Retirement Program's trust funds, including the financial statements and the controls in the retirement systems program. OPM adheres to the requirements of the Federal Managers Financial Integrity Act and assesses annually internal controls to identify any reporting material weaknesses relating to its benefits programs, including the Retirement Program. No reportable material weaknesses in the Retirement Program have been identified through this internal review. OPM's QAG also reviews internal controls among the retirement benefit programs as a component of the audit. QAG also reviews management operations for efficiency and effectiveness and provides recommendations for action to OPM management on a periodic basis. Actuarial valuations of the program are also subject to an annual independent audit. No material weaknesses have been identified through the internal review in this area. The Retirement Program has processes in place to track production data on a weekly basis and mitigate failure by bringing needed corrective action(s) to managers' attention. Additionally, the agency receives a list each year from our Inspector General of the top management challenges facing OPM. Retirement Systems Modernization (RSM) was identified in 2003 as one of those challenges and is being addressed through a multi-year implementation with a 2009 completion date. RSM will allow OPM to maintain current service levels to retiring employees, keep up with customer expectations, and manage the workload associated with significant increases in the FERS retirement annuitant population.

Evidence: OPM has processes in place to track production data and mitigate failure by bringing needed correction actions to management attention. OPM's Management Information Branch collects, reports and reviews workload information and reports trends to management. OPM's QAG conducts periodic program evaluations on timeliness and error frequency, and reports findings to senior management as well. Any recurring problems are brought to the appropriate program manager for resolution.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: OPM measures long term results of the Retirement Program and has achieved significant progress towards accomplishment of baselines and ambitious targets its long-term measures for the Retirement Program. The long term measures address whether retirement program provides "effective" services to the current & retired Federal employees. These outcome measures address whether the program provides a logical link toward recruitment and retention. The retirement readiness measures show the employees perceive they are ready for retirement i.e., OPM ensures the retirees' plan for their financial futures. During 2004 and 2006, OPM developed and administered the Federal Benefits Survey to establish baselines for six of long-term measures for the Retirement Program. The purpose of the survey was to measure employees' attitudes about the importance, value and competitiveness of the annuity and thrift savings benefits programs with regards to their decision to either accept Federal employment to stay employed with the Federal Government. The targets are ambitious in the sense that OPM must influence the perceptions of tens of thousands of new and tenured employees to realize an increase in these measures, i.e., this increase reflects potential population impact in influencing 68,400 current employees of the 1.8 million workforce over a two-year period on the benefits of the retirement program. OPM set ambitious targets for its long term measures; however, lacking the objective linkage to recruitment and retention data, it would be irresponsible to set overly aggressive subjective factor (competitive, a fair value, and important) sub-targets; taking programmatic initiatives in attempt to influence one of the factors may cause OPM to realize unintended consequence of sub-optimizing one factor at the expense of the other. After RSM is in place and OPM can test various programmatic alternatives against both subjective and objective outcome factors; then OPM will be able to set more aggressive outcome-based targets. OPM's significant progress towards creating a baseline set of measures of employee attitude towards the retirement benefits and the resultant impact on their decision to accept or stay with Federal employment sets the stage for the ability to test retirement program alternatives and compare them against employee attitudes to three factors: importance, value and competitiveness of the annuity and thrift savings benefits. In response to The Thrift Savings Plan Open Elections Act of 2004, OPM developed and administered the Retirement Readiness Index Survey. These two long term measures focus on the outcome of retirement financial education??to provide employees information on how to plan for retirement and how to calculate the retirement investment needed to meet their retirement goals. The initial survey and data established a performance baseline. Ambitious baseline data is representative of the population of 1.8 million civilian employees. The data for baseline survey show Federal employees perceive they are ready for retirement compared to non-federal employees. Upon comparison of trends associated with employee opinion data gained from this survey and subsequent development of the Retirement Readiness Profile with implementation of more objective measures of employee wealth (sufficient income to support desired standard of living in retirement), and OPM development of the Federal Ballpark Estimate (automatic calculation of CSRS/FERS retirement benefits and TSP account balances and inform employees of progress relative to retirement goals), OPM will be able to set objective and more aggressive long-term outcome-oriented targets for the employee retirement readiness.

Evidence: The Federal Benefits Survey, (FY 2006). See measures tab for description of long term measures (PART FY 2004 and FY 2007). The percent of new hires who say the retirement annuity and thrift savings plan are important to their decision to accept federal employment is 91%, while the percent of new hires who say the retirement benefits are a good value is 57.5%, and the percent of new hires who say the retirement benefits are competitive is 58.5%. The percent of employees who say the retirement annuity and thrift savings plan are important to their decision to accept federal employment is 94%, while the percent of new hires who say the retirement benefits are a good value is 66.0%, and the percent of new hires who say the retirement benefits are competitive is 61.0%. Benefits Administration Letter Number: 06-105, Retirement Readiness Employee Survey Results, Office of Personnel Management, (June 2006). The initial survey and data established a performance baseline. The percent of employees who say they are on track or ahead of schedule when it comes to planning and savings for retirement is 82%; while the percent of employees who have tried to figure out how much money they will need to have saved by the time they retire is 48%.

Does the program (including program partners) achieve its annual performance goals?

Explanation: Though OPM operates the vast majority of the retirement benefit processing program in-house, any program partners we work with in those operations are held accountable through contractual requirements to meet annual performance goals for the standards OPM has set. For example, OPM uses a contractor to handle overflow customer service phone calls, and this contractor is held accountable for meeting contractual performance standards. On a broader level, every agency or organization with employees covered under CSRS or FERS is a partner, OPM ensures Agency Benefits Officers partner with OPM in our efforts to increase the education of employees on retirement benefits. Agencies Benefits Officers conduct mid-career and Pre-retirement seminars for their employees during which time information is provided about their benefits into retirement. The retirement program measures the employee satisfaction with course delivery and content through standard Kirkpatrick level 1 and level 2 training and development measures. Further, OPM works with those agencies administering programs that interface with the retirement programs, such as the Department of Labor (workers compensation), the Social Security Administration, the Federal Retirement Thrift Investment Board (Thrift Savings Plan), and Department of the Treasury (payment disbursement). Some of the annual performance goals have been met or exceeded for this program.

Evidence: OPM has obligated funds to handle the overflow of Retirement Program customer telephone calls through outside contractor support. Since FY 2003, RSP has maintained the capacity to answer 25,000 additional calls each month through the contractor, which increases customer satisfaction and call handling rates, indicators that OPM tracks on an annual basis. As an example of inter-agency cooperation, OPM worked closely with the Department of Labor in developing the Administration's pending proposal to reform the workers' compensation provisions applicable to individuals who reach retirement age without a recovery from their disabling conditions.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: The retirement program annual measures directly relate to the legal requirement to provide "timely and accurate" payments to Federal employees. The annual measures address long-term program goal that OPM is efficiently (annual efficiency measures) delivering services that meet the government's inherent moral responsibilities of an employer and steward of taxpayer resources and whether OPM is meeting the changing demand (annual output measures). OPM performance towards meeting annual effectiveness and efficiency goals has demonstrated efficient progress toward achieving the retirement program's long-term goals of providing Federal employees options and tools for retirement planning for their and their families' financial future and serving as an important component of employee compensation and therefore supporting Federal agencies' recruitment and retention needs. For FY 2006, OPM made substantial progress in improving its performance in processing retirement annuity claims compared to past years. For FY 2005, the processing timeliness for CSRS and FERS annuity cases were 80 and 93 days respectively. For FY 2006, the retirement program significantly reduced average process cycle time to 30.6 days. Achieving timeliness goals required a short-term tradeoff in Claims Processing Accuracy (CSRS & FERS). A consequence of the focus on eliminating the backlog of claims and reducing average processing time by two-thirds, some processing review resources were temporarily shifted to processing from reviewing. Now that these efforts have yielded the desired result, resources have been returned to the reviewing process to improve accuracy rates. Overall the long-term efficiency goals were balanced with the emphasis on effectiveness or increased timeliness and basically the same unit cost; thereby significantly increasing productivity. Additionally, achieving timeliness goals required a short-term tradeoff in Claims Processing Accuracy unit cost. The retirement program concentrated improvement efforts on incremental process-oriented improvements in the short term while simultaneously undergoing a transformation and modernization of the retirement systems. The key to reducing unit costs in the long term lies in upgrading to electronic claims processing through the continuation of the Retirement Systems Modernization, (RSM) and reducing the reliance on labor-intensive processes. Retirement System Modernization will be fully implemented during 2008 and 2009; and the investment will temporally increase unit cost. The performance goals for unit costs will be aggressive in the next few years just to maintain costs at current levels because of system conversions. Several of the performance measures indicate improvements over time.

Evidence: Office of Personnel Management Performance and Accountability Report (2006). See Annual PARs; Annual CBJ/PB's. A primary focus of OPM retirement program was the improvement of the retirement claims processing??operational goal B-4, make final 90 percent of initial retirement benefits in 30 days by October 1, 2006. During FY 2006, OPM received and processed more than 100,000 retirement claims with an average processing time of about of about 30 days and with over 91 percent of claims received in September 2006 were processed within 30 days. OPM made substantial progress in improving its performance in processing retirement annuity claims compared to past years. For FY 2005, the processing timeliness for CSRS and FERS annuity cases were 80 and 93 days respectively. For FY 2006, the retirement program significantly reduced average process cycle time to 30.6 days. All annual measures have targets through 2009.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: The OPM Benchmark study in July 2005 results indicate the benefit package offered by the Federal Government compared in total to private sector employers was valued higher by approximately 9% of pay. Additionally, OPM conducted an independent study to improve the retirement readiness of Federal employees. Through a contract OPM created a retirement readiness profile index (RRI). The RRI reflects what retirement readiness should look like at various ages or career points. The RRI identifies what Federal employees should know about retirement and what actions they should take to adequately plan for retirement. When it comes to planning and saving for retirement, Federal workers are considerably more likely to believe they are on track or ahead of schedule than American workers in general. Five in ten Federal workers, but less than one in ten American workers, report they are ahead of schedule in planning and saving for retirement. On the other hand, less than two in ten Federal employees, compared to more than five in ten American workers, think they are behind schedule. Attitudes about retirement preparedness are strongly linked to affluence among American workers overall, with higher-income workers tending to believe they are better prepared than lower-income workers. Within the Federal workforce, however, this trend is reversed. OPM will need to compile performance data on other similar programs to determine how these programs compare.

Evidence: See measures tab for description of annual measures targets and timeframes. (PART FY 2004 and FY 2007). As OPM's evidence shows, the Retirement Program has demonstrated improved efficiency and cost effectiveness over the last several years. In terms of cost effectiveness, Retirement Program administrative costs are very low: less than 1% of claims paid.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: OPM has laid the groundwork for progressive research and is developing new approaches in the research domain of employer retirement programs. The focus of feasible alternatives to OPM's evaluation of program effectiveness rest was on ensuring independent evaluations are of comprehensive scope and quality (given current affordability constraints) to demonstrate the program is effective and is achieving results and to improve the program. The program evaluation therefore focuses measures on the employee's interaction with the retirement program annually through the employee benefit survey. Though no single source of rigorous research exists presently, OPM developed a Strategic Framework encompassing a comprehensive group of three dimensions relevant to assessing retirement program performance. OPM has benchmarked Federal retirement programs with private industry and State government programs (2005). OPM conducted an independent study to improve the retirement readiness of Federal employees. OPM established a baseline and set long-term targets for the Retirement Readiness Index: Percent of employees who are at the appropriate stage of retirement planning. OPM conducted an employee benefit survey to measure employee and annuitant satisfaction with their retirement benefits. OPM will conduct the following program evaluation efforts in fiscal year 2008: Establish baseline for measure of income adequacy of coverage in conjunction with life insurance benefits (2008). Test retirement readiness of specific employee groups by conducting exit survey on income adequacy (2008). Measure employee satisfaction/communication via use of the internet (2008). OPM retirement benefits compares favorably to private industry and state government. OPM Benchmark study of OPM's benefit programs compared Federal Employees Retirement System (FERS) cost sharing to benefit plans offered by both private and public sector employers. The retirement benefit was expressed as a percentage of average pay based on the average salary of profiled employees: Federal Government (14.40%), Public Sector (14.47%), Private Sector (8.20%), Private Sector and Public Sector Combined (9.23%). The Public Sector value of 14.47% includes only Defined Benefit value; this was largely due to the fact that private sector retirement benefits varied widely. For example, defined benefit retirement plans were offered by less than half of private sector employers.

Evidence: Benchmarking study to determine how Federal benefits compare to those offered by private sector employers. U.S. OPM benefits Benchmark Study Results (June, 2005). The benefit package offered by the Federal Government compared in total to private sector employers was valued higher by approximately 9% of pay. Benefits Administration Letter Number: 06-105, Retirement Readiness Employee Survey Results, Office of Personnel Management, (June 2006). When it comes to planning and saving for retirement, Federal workers are considerably more likely to believe they are on track or ahead of schedule than American workers in general. Evidence: The Retirement Prospects of the Baby Boomers, Congressional Budget Office (March 2004) Retirement Age and the Need for Saving, Congressional Budget Office (May 2004). Measurement Methodologies Available for Employee Benefit Plans: Findings from Literature Review, Office of Personnel Management (December 2005).