Paperwork to Portal: How Federal Retirement Just Got Easier
Many individuals envision leaving a career after 30 or 40 years and transitioning seamlessly into retirement; a time to spend with family or check off items from their bucket list. For the federal employees we serve, however, this transition is often more challenging due to an antiquated retirement system. While they know they’ll receive a federal pension, the exact amount and the timing of the payments can be surprisingly opaque. As financial advisors, we understand how clunky this process can be, and we do our best to prepare our clients financially for the transition.
Although I’m not a federal employee myself, I’ve worked with many clients who have retired from federal service. To begin the process, an individual works with the human resources office at their agency to verify employment and work history. Once that step is complete, the information is forwarded to the Office of Personnel Management (OPM), which processes the claim and sets up the retiree’s annuity payments.
This sounds like a straightforward, linear process, but it can take anywhere from 30 days to as long as five months, depending on the complexity. Retirees often describe it as slow and cumbersome. Paperwork had to be mailed in, and once submitted, applicants entered a waiting game with little transparency into where their application stood. If errors or omissions were discovered, new paperwork had to be mailed back and forth, creating further delays. This drawn-out process often led to frustration, as waiting times to reach someone at OPM were long and answers could be inconsistent. All this is combined to create a lackluster experience for an otherwise distinguished federal career.
Fortunately, recent changes aim to make the process more efficient and transparent. While the basic steps remain the same, the system has now been digitized. In May, the federal government launched the Online Retirement Application (ORA), its new online portal. For the first time, retirees can file their entire retirement application online.
Key features of the ORA include pre-filled applications to reduce manual entry, real-time estimated annuity amounts, a status tracker to monitor application progress and seamless collaboration between applicants, human resources, and payroll providers so everyone sees the same information
Although there are still some bugs to work out, this new setup is expected to cut processing times to one to three months and in some cases, as little as two weeks.
As financial advisors, one of our core responsibilities is to help clients navigate the transition from career to retirement, which includes its financial and emotional components. We pride ourselves on understanding the federal pension system and educating clients so they can make the best decisions for both the near and long term. Staying up to date on changes to the federal retirement process is an extension of that commitment and one of the ways we deliver value to the federal employees we serve.