FROM THE OFFICE OF PUBLIC AFFAIRS

LINDA OAKEY-HEMPHILL

HOUSE GOVERNMENT REFORM AND OVERSIGHT

SUBCOMMITTEE ON CIVIL SERVICE

I am pleased to appear today to discuss the subject of erroneous enrollment in the federal retirement systems. Erroneous retirement coverages have been an on-going concern during the past 13 years, since the Social Security Act was amended to provide coverage for federal employees. During this time, Treasury staff has attempted to act both responsibly as a federal executive agency and with compassion for the affected employees. In light of Treasury’s tax collection and financial management roles, our interest in resolving retirement coverage issues has been especially pressing.

The departmental office of personnel policy, in which I work, is responsible for providing technical and policy guidance in the various personnel specialities, and liaison with other agencies (such as the Office of Personnel Management) for the Department’s 13 bureaus. Our primary internal contacts are with the bureaus’ headquarters human resources staffs.

Retirement coverage depends on each employee’s unique service history and can be affected by numerous factors. Presently, there is no reliable method to identify coverage errors. Often neither the employee nor the agency is aware of the error until the employee retires, a pay change occurs, or some other triggering event happens. Because of this it can be years before an error is detected.

Given the variety of errors in coverage that we have encountered; our field structure; staff changes; and changes in personnel payroll systems, we have been unable to determine, with certainty, the total numbers of errors that may have been identified and corrected in Treasury since 1984. However, for the calendar years beginning in 1994 through the present Treasury corrected an estimated 600 errors. This number does not include those errors which continued for less than one year, or those for which a deemed Federal Employees Retirement System (FERS) election was made.

Preventing coverage errors

While we do not have specific data on the total number of errors we have corrected, we have recognized incorrect coverage as a significant problem. Consequently, on an on-going basis, we have worked cooperatively with other agencies and the IRS in an effort to prevent coverage errors from occurring and to reduce the negative impact that correction of these errors can have on employees. We have found that, despite the substantial effort and high degree of good will and cooperation among the key agencies, the available administrative remedies for preventing and correcting these errors are not sufficient to stop them from occurring, or to make all affected employees whole with respect to their retirement and other financial planning. Following are a sampling of activities that we have undertaken, many in conjunction with other agencies, to prevent errors.

Prior to the implementation of the Social Security Act changes (Public Law 98-21), we arranged for social security staff to train bureau headquarters benefits staffs concerning coverage and benefits issues. This training was offered again by the Department in 1986, prior to FERS implementation. In 1983, OPM assisted the Department by providing a briefing for the Secretary and staff, including bureau heads, concerning the Social Security Act changes. This helped to ensure attention at the highest levels to the correct identification of affected employees within the Department.

 

In 1984, amendments to the Social Security Act (Public Law 98-369) required retroactive social security coverage for certain employees hired or converted to permanent appointments on or after January 1, 1984. Our office developed detailed guidance to assist the bureaus in correctly identifying affected employees when implementing the law.

 

In 1986, the Department, with support from OPM staff, prepared procedures for the bureaus’ use in correctly identifying employees to be converted to FERS coverage effective January 1, 1987. Appropriate system logic was developed to assist the identification and automatic conversion to FERS. OPM shared this material with other agencies through an interagency meeting.

 

In 1986, our office was instrumental in bringing together other Cabinet agencies in a series of regular meetings to analyze the FERS act, discuss implementation strategies, and, in general, attempt to ensure proper implementation of the law and its coverage provisions. These meetings continued into 1987. Technical experts from OPM and the Social Security Administration attended and provided support to the group.

 

 

In 1987, prior to the FERS open season, Treasury prepared procedures for the bureaus to use in order to process elections correctly. These were reviewed for technical accuracy by OPM staff who later shared the material government-wide.

In 1993, OPM reviewed and commented on a course that we developed to train bureau personnel staff in making correct retirement coverage determinations. The course, which has been revised several times, is still being used within Treasury. We have provided copies to other agencies.

 

In 1996, we worked with the IRS taxpayer services division and the Department of Agriculture (Treasury’s payroll system provider) to implement changes to the Social Security Act that affected employees transferred to international organizations. The materials prepared in this project were used by other cross-serviced agencies. Taxpayer services issued a bulletin to assist the transferred employees from all agencies in properly filing their tax returns.

 

Minimizing impact

Our efforts to minimize the negative impact of retirement coverage corrections have focused primarily on improving the quality of our counseling and records corrections requirements. When an error has occurred, we believe it is the agency’s responsibility to inform the employee fully about the options that may be available and to make the correction swiftly and accurately. We have also endeavored to keep abreast of emerging legal issues related to the correction of errors. The following are our activities in relationship to minimizing the negative impact of corrections:

In 1990, when the law was amended to permit agencies to pay lost earnings to thrift savings plan accounts in cases of agency error, the Federal Retirement Thrift Investment Board responded to Treasury’s request for assistance by developing and presenting training on correction of records to the bureaus’ payroll and personnel representatives. The training presentation was accompanied by our written policy guidance. Subsequently, we have periodically scheduled special Treasury sessions of the board’s on-going training classes. Coverage issues are often raised in these training sessions. Additionally, Treasury systems staff has subsequently developed a course to teach bureau personnel staffs about error correction and lost earnings processing.

In 1994, we coordinated a meeting of representatives from OPM, Social Security, IRS, GAO, and Justice to discuss a strategy for the resolution of certain issues related to retirement coverage corrections involving erroneous exclusions from social security coverage.

 

 

Also in 1994, we reviewed and commented on the detailed procedures that were developed by the IRS headquarters staff for field offices to use when processing corrections of retirement coverage. These procedures remain in use by IRS.

 

In 1994, we prepared and distributed model correspondence for the bureaus’ use in notifying employees of coverage errors and their options related to correction of their retirement coverage. We were assisted by the Federal Retirement Thrift Investment Board whose staff reviewed and commented on our drafts with respect to accuracy of the information concerning thrift savings plan account corrections.

We recently were successful in making special arrangements with the payroll system for corrections involving employees who were erroneously excluded from social security tax coverage, pending the resolution of outstanding legal issues.

 

We also have queried the payroll personnel system in an effort to identify likely retirement coverage errors and are preparing correspondence transmitting the resulting reports to the bureaus. We will request that the bureaus review individual employee records to verify coverages.

 

In addition to the above, many of the bureaus have undertaken reviews of their employees’ records to identify and correct coverage errors.

We have attempted to be proactive in our approach to ensuring that Treasury employees are properly covered by retirement ; that corrections to coverage errors are handled promptly and performed appropriately; and that employees are informed about their benefits coverages and choices. I would be happy to answer any questions that you may have.