Federal Disability Retirement under FERS or CSRS: Understanding the Different Perspectives and Differing Interests
by Attorney Robert R. McGill
As with most things in life, attempting to secure a Federal Disability Retirement annuity under FERS or CSRS requires an extraordinary amount of time, effort, planning, and the collection, formulation and coordination of a compendium of information. Multiple questions arise at the early stages of planning: Can I live on 60% of the average of one’s highest-3 consecutive years of salary for the first year, then upon the second and subsequent years at 40% (planning stage)? Will my doctor support me (collection of information stage)? How must it be stated, and what must be stated, on the Applicant’s Statement of Disability (Standard Form 3112A, both for FERS & CSRS) (formulation stage)? How do I get the doctor to cooperate, make sure my Supervisor does his or her portion, and who fills out the Agency Certification of Reassignment and Accommodation Efforts (SF 3112D) (coordination stage)? And these are just a small fraction of the questions one needs to ask in preparing to file for Federal Disability Retirement benefits.
Before engaging in the minutiae of preparing an application for Federal Disability Retirement, it is often a good idea to take a macro-perspective of the process as a whole.
What a potential applicant for Federal Disability Retirement needs to understand, at a minimum, are the varying perspectives of (potentially) differing interests involved in the totality of the process of this “thing” called Federal Disability Retirement under FERS or CSRS. The four (4) main interests involved are: (1) The individual applicant who will be filing for Federal Disability Retirement benefits; (2) The Agency for which the applicant works; (3) The Doctor who is treating the applicant who is contemplating filing for Federal Disability Retirement benefits; and (4) The Office of Personnel Management. The key to success in filing and winning an approval is to recognize the different perspectives of each of the four main interests, to coordinate the differing interests, and then to formulate a plan to garner the proper support from each.
Thus, let us take each interest in the order listed:
1. The individual applicant who is contemplating filing for Federal Disability Retirement benefits under FERS or CSRS. Whether because of medical conditions which have impacted the physical body – from Cervical, Lumbar or Thoracic degenerative diseases, or Shoulder Impingement Syndrome; Lupus; Multiple Sclerosis; Parkinson’s Disease; Carpal Tunnel Syndrome; Plantar Fasciitis; Multiple Chemical Sensitivity (including allergies); Fibromyalgia; Chronic Fatigue Syndrome; Migraine headaches; or a host of other medical conditions not listed (this is not intended to be an exhaustive list, by any stretch of the imagination) – to Psychiatric diagnoses of Major Depression, Generalized Anxiety Disorder; panic attacks, Agoraphobia; Obsessive-Compulsive Disorder; ADD or ADHD; Autism Spectrum Disorders (including Asperger’s); Post Traumatic Stress Disorder, etc. (again, this list is not meant to be exhaustive), the important point is to know that the individual has come to a stage in his or her life where a medical disability has become so intractable, despite surgery, physical therapy, medication regimens; psychotropic medications; psychotherapeutic intervention; and multiple other reasonable modalities of treatments – all of which have been merely temporary and palliative in nature; but work is and has been suffering; and the individual cannot perform one or more of the essential elements of the job, and the medical condition is expected to last for a minimum of 12 months. The time has come to file. Work and career have been a major part of one’s life, and it is difficult to come to acknowledge the reality that such work cannot be performed anymore, and the years invested with an Agency must come to an end. This is where “quality of life” issues become important: Am I coming home each day just to recuperate to make it to work for another day? Am I using up so much LWOP that my performance is suffering? Am I in danger of being placed on a PIP? Is my Agency thinking about terminating me? Before it reaches a critical point, it is important to begin planning; and the first step in planning is to acknowledge bluntly and forthrightly, that the time has come to file for Federal Disability Retirement under FERS or CSRS.
2. The Agency for which the applicant works. Agencies are strange organic entities. They reflect, on a microcosmic scale, the people at all levels who work for the Agency. Don’t ever expect that loyalty is a bilateral avenue – it is not. Your loyalty for twenty years to an Agency will not be remembered on the day you start to impede the mission of the Agency. An employee’s loyalty to an Agency is rewarded only to the extent that the level of performance reflects positively upon the immediate Supervisor. Once the performance level begins to falter, the true avenue of loyalty reveals itself: it is a unilateral avenue. Your years of loyalty are forgotten. Is there a solution to this problem? To some extent; by persuading those who are open to persuasion, that the applicant for Federal Disability Retirement benefits and the Agency have a common goal: the Agency wants the vacant position which the applicant presently fills; the applicant wants to secure his or her financial security by obtaining Federal Disability Retirement benefits. Thus, the emphasis upon the commonality of goals can result in a positive result which is beneficial to both parties.
3. The Doctor who is treating the applicant. He or she is the critical linchpin of the case, and to garner the support of the most valuable resource in a Federal Disability Retirement case is essential. By his or her very nature, the doctor hates such administrative details of the job. To be asked to write a medical narrative report is anathema to the very essence of who a doctor is. A doctor is trained to treat patients. The administrative headaches of writing a convincing, excellent narrative report is the last thing that a doctor wants to do. It is therefore critically important to explain to the doctor, in clear and concise terms, the nature of Federal Disability Retirement; how it differs from Social Security or Worker’s Comp; what elements and issues need to be addressed in the narrative report; and why helping to obtain Federal Disability Retirement benefits is in the best interests of the patient.
4. The Office of Personnel Management. This is the toughest out of the four. This is the Agency which receives and reviews all Federal Disability Retirement applications under FERS or CSRS. They apply the legal criteria in determining whether or not the applicant qualifies. Not everyone who makes a decision is fully informed of the governing laws, and so it is imperative that an Application for Federal Disability Retirement is well-formulated, concisely written, descriptively delineated, and supported by credible medical documentation. The Office of Personnel Management (OPM) will never meet you; you are a faceless entity with merely a paper trail. As such, the paper submission must be convincing, persuasive, and meet the burden of proof by a preponderance of the evidence.
A successful Federal Disability Retirement application under FERS or CSRS, submitted to the Office of Personnel Management, must take into account all of the four (4) interests described above, and coordinate them, taking into account the differing perspectives which will often involve seemingly opposing interests. It is the ability to garner the support of each, to coordinate and extrapolate the advantages from each, and to compile, formulate, and prepare an excellent presentation which will have a high chance of being approved by the Office of Personnel Management. This is where one might consider the “5th” entity – that of an Attorney who specializes in Federal Disability Retirement laws. It is a consideration worth pursuing, especially because it concerns the future financial security of a Federal or Postal employee which we are speaking about – you.
Attorney Robert R. McGill specializes in federal disability retirement cases helping Federal and Postal workers secure their disability retirement benefits under both FERS and CSRS.
Letter Carriers Union President Rolando Urges Senate Panel to Help Postal Service by Reforming Pre-Funding Requirement
WASHINGTON—The head of the National Association of Letter Carriers (NALC) union urged Congress today to reject a Postal Service proposal to eliminate Saturday mail delivery to American citizens as a quick fix to the financial problems of the U.S. Postal Service, saying that lawmakers should instead implement recommendations of the USPS Office of Inspector General to save the Postal Service tens of billions of dollars in unnecessary retiree health pre-funding payments by returning the $75 billion it has been overcharged for civil service pension costs.
NALC President Fredric V. Rolando said “action on the pre-funding requirement is the best starting point for a long-term strategy to preserve affordable universal service, a strategy that must include product innovation and revenue generation as well as efficiency improvements developed in negotiations for new employee contracts.”
The postal Inspector General (IG) issued a report in January (“The Postal Service’s Share of CSRS Pension Responsibility,” Report Number: RARC-WP-10-001) that found that the Postal Service had been overcharged by $75 billion going back to 1971, when the USPS was created, for pension costs associated with pre-1971 service by employees of the taxpayer-funded Post Office Department. The IG recommended that the accurately measured ‘postal surplus’ in the Civil Service Retirement Fund be transferred to the Postal Service Retiree Health Benefits Fund, which would allow Congress to repeal the crushing pre-funding payments for retiree health now required by law.
In a statement submitted to a hearing of the Senate Appropriations Subcommittee on Federal Service and General Government, Rolando said the U.S. Postal Service “is too important to the country to make rash decisions in an environment of financial distress.”
Rolando characterized the proposal of Postmaster General John E. Potter to discontinue Saturday mail delivery and collections as “draconian.” He said such an action “should be a last resort policy, not a first resort policy.”
“The 200,000 men and women who deliver the mail on city carrier routes today urge you to exercise great caution and to stop and consider the real cause of the immediate crisis: the unworkable and unreasonable pre-funding policy adopted in 2006,” Rolando said. “Congress should correct the retiree health pre-funding policy first – it is the single most effective step you can take to stabilize the Postal Service’s finances.”
Rolando acknowledged that in addition to pre-funding reform the Postal Service’s business model deserves a serious and comprehensive debate in order to secure the long-term viability of the Postal Service.
“NALC and the other postal unions are prepared to deal with the lingering effects of the recession and the negative impact of the Internet at the negotiating table, just as we have adapted to varying business conditions for some 40 years of successful collective bargaining,” he said.
“We believe that it is only in the context of financial stability that a serious and careful legislative debate can take place,” Rolando concluded. “That will require us to do our part at the bargaining table and for Congress to do its part on retiree health pre-funding reform.”
PRC Seeking Third Party Consultant Services To Review USPS Current CSRS Obligations
PRC looking for Actuarial Consultant Services to review current CSRS obligations
Statement of Work for Actuarial Consultant Services – Federal Business Opportunities: Opportunities:
Recent Developments
On January 20, 2010, the U.S. Postal Service Office of Inspector General (OIG) published a document entitled “The Postal Service’s Share of CSRS Pension Responsibility.” This paper is identified as Report No. RARC-WP-10-001 and is posted under White Papers on the USPS OIG’s website.
The paper examines the Postal Service’s responsibility for CSRS-related pension obligations at the time of the Postal Service’s July 1, 1971 transition from a Department-level agency (Post Office Department) to an independent establishment of the federal government. It notes that the Office of Personnel Management (OPM) developed the current method of allocating these obligations between the Postal Service and the Federal Government and explains the methodology, including key assumptions. The report also describes an approach that the OIG believes would be more appropriate and equitable.
On February 23, 2010, as modified March 2, 2010, the Postal Service requested that the Commission initiate a review of decisions made by OPM regarding the Postal Service’s CSRS liabilities and issues highlighted in the USPS OIG report, including the report’s conclusion that OPM’s method, among other things, has resulted in substantial overfunding. The request was filed pursuant to section 802(c) of the Postal Accountability and Enhancement Act (PAEA) of 2006, Pub. L. 109-435, 120 Stat. 3250-51. The Postal Service requests the Commission’s opinion on the fairness and equity of the current OPM method used to apportion the CSRS obligation between the Postal Service and the POD.
Objectives
The PRC requires actuarial consultant services, using the OIG report as background, to review the method selected by OPM to allocate CSRS obligations associated with USPS employees’ POD-era service between the Postal Service and the federal government.
Tasks
The actuarial consultant shall provide reports, documentation and deliverables in verbal, written or electronic format (as appropriate) and shall provide weekly written progress reports.
Project Details
The actuarial consultant shall:
Review the method employed by OPM to allocate CSRS liabilities incurred during employment by the POD and during employment with the USPS between the Postal Service and the Federal Government for the purpose of assessing the advantages and disadvantages of this allocation method
Advise as to any alternative methods that should be considered, including (but not limited to) the method suggested in the OIG paper
Provide an assessment of how an allocation would be structured if all parties had negotiating power similar to that involved in acquisitions in the private sector
As applicable, provide recommendations typically made in similar situations for estimating the allocation of pension liability between a parent company and subsidiaries, particularly if those subsidiaries are divested
As applicable, compare OPM’s current method of allocation to standard or typical allocation methods used in a spin-off by other semi-government, government bodies or private sector entity undergoing a similar restructuring
Meet with OPM, USPS and USPS OIG actuaries, as needed, to discuss and to apply methods and results.
Support PRC staff members in identifying and assessing appropriate allocation methods
Provide related supporting data and, to the extent practicable, models or description thereof, to PRC staff
Address the appropriate level of funding for a Retiree Pension fund, including standard or typical practice, risks of overfunding vs. underfunding, volatility of funding assumptions, and any other important issues
Requirements
The actuarial consultant must be a member in good standing of the American Academy of Actuaries, have extensive experience in the pension field, and must have experience analyzing pension issues in a legal and legislative context.
The actuarial consultant must disclose all current and previous work performed for USPS or any other federal agency. The actuarial consultant also must disclose any pending negotiations for professional engagements with USPS or other federal agencies, apart from this SOW.
The actuarial consultant shall provide a description of qualifications, proposed work methods, an estimate of the length of time needed to complete the project, the total cost of the project, and the basis for the calculation.
The actuarial consultant shall acknowledge that if selected to provide professional services pursuant to this SOW, all work will be conducted with the understanding that time is of the essence in meeting the contractual deadline and that no extension of the deadline will be allowed.
Deliverables Date due: July 1, 2010
Provide a written evaluation of the determinative factors in assessing an appropriate allocation method and an evaluation of the current method used in OPM’s allocation. The evaluation will include:
1. A comparison, where appropriate, to allocation methods typically used for splitting pension liabilities;
2. An assessment of the alternative method set out in the OIG paper;
3. Specific discussion of the effects of the current allocation method on affected parties
Commission and Staff Review Session
PRC Initiates Review of USPS Pension Liability
PRC Press Release
Washington, DC – The Postal Regulatory Commission yesterday issued a Notice establishing Docket SS2010-1 to conduct a review of the Civil Service Retirement System (CSRS) pension liability of the United States Postal Service.
“This is an important study which will provide information regarding the financial health and viability of the Postal Service, and it will assist the Commission as it analyzes the mounting financial losses the Postal Service is projecting,” said Chairman Ruth Y. Goldway.
The Commission action is called for under section 802(c) of the Postal Accountability and Enhancement Act, which directs the Commission, upon request of the Postal Service, to promptly procure the services of an actuary qualified to evaluate pension obligations to conduct a review in accordance with generally accepted actuarial practices and principles and to provide a report to the Commission containing the results of the review.
Upon the Commission’s receipt and approval of the actuary’s report, together with any comments the Commission may choose to make, the report shall be submitted to the Postal Service, the U.S. Office of Personnel Management (OPM), and Congress.
OPM is responsible for calculating the Postal Service’s CSRS pension liability. The Postal Service filed its request with the Commission on February 23, 2010.
NOTICE OF REQUEST FOR COMMISSION REVIEW PURSUANT TO SECTION 802(c) OF THE POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT
(March 1, 2010)
On February 23, 2010, the United States Postal Service (Postal Service) filed a request with the Postal Regulatory Commission (Commission) pursuant to section 802(c) of
the Postal Accountability and Enhancement Act (PAEA). Pub. L. No. 109-435, 120 Stat. 3250 (2006), not codified; see 5 U.S.C. 8348 note.1 The Postal Service requests that the
Commission initiate a review of determinations made by the Office of Personnel Management (OPM) regarding the Postal Service’s Civil Service Retirement System (CSRS) liabilities and
matters raised in a recent report of the Postal Service’s Office of the Inspector General (OIG), The Postal Service’s Share of CSRS Pension Responsibility, January 20, 2010.2
Section 802(c) directs the Commission, upon request of the Postal Service, to promptly procure the services of an actuary qualified to evaluate pension obligations to conduct a review in accordance with generally accepted actuarial practices and principles and to provide a report to the Commission containing the results of the review. Upon the Commission’s receipt and approval of the report, together with any comments the Commission may choose to make, the report shall be submitted to the Postal Service, OPM, and Congress.
1 Request of the United States Postal Service for the Commission to Conduct a Review Pursuant to PAEA Section 802(c) of OPM Determinations Regarding CSRS, February 23, 2010 (Request). Although the Postal Service submitted its filing as Docket No. PI2010-2, the Request is for a “Special Study” and will be docketed as Docket No. SS2010-1, a designation the Commission has used previously.
2 The report is available at http://www.uspsoig.gov/foia_files/RARC-WP-10-001.pdf.
Section 802(c) directs OPM to reconsider its determinations in light of the report and make appropriate adjustments. Thereafter, OPM is to report the results of its reconsideration
to the Commission, the Postal Service, and Congress In support of the Request, the Postal Service states that the OIG report raises serious questions about the appropriate calculation of the Postal Service’s CSRS liabilities and that the magnitude of the amounts is more than sufficient to color debate on the true state of the Postal Service’s present and future financial health. Request at 1-2.
Pursuant to the Postal Service’s Request, the Commission shall acquire the services of an actuary, obtain a report, and take other actions consistent with the provisions of section 802(c) of the PAEA.
Shoshana M. Grove
Secretary
New OIG Study Estimates USPS Has Been Overcharged for the CSRS Pension Fund by $75 Billion
A study just released by the U.S. Postal Service’s Office of Inspector General (OIG) shows that the current system of funding the Postal Service’s Civil Service Retirement System pension responsibility is inequitable and has resulted in the Postal Service overpaying $75 billion to the pension fund. The OIG estimates that if the overcharge was used to prepay the Postal Service’s health benefits fund, it would fully meet all of the Postal Service’s accrued retiree health care liabilities and eliminate the need for the required annual payments of more than $5 billion. Also, the health benefits fund could immediately start meeting its intended purpose — paying the annual payment for current retirees, which was $2 billion in 2009.
This marks the third time the Postal Service has been overcharged. In 2002 it was determined the Postal Service would overfund CSRS by $78 billion. Legislation in 2003 corrected this overfunding. Then it was determined the Postal Service was overcharged $27 billion for CSRS military service credits. In 2006 these funds were returned to the Postal Service by Congress, and the surplus was used to fund retiree health care liabilities.
This study, The Postal Service’s Share of CSRS Pension Responsibility , undertaken in conjunction with the Hay Group, is the third paper sponsored by the OIG that delves into the financial entanglements between the Postal Service and the federal government — generally at the expense of the Postal Service. The latest study describes the inequitable allocation of CSRS costs between the federal government and the Postal Service. The other two reports focus on the Postal Service’s congressionally-mandated retiree health care prefunding payments (Estimates of Postal Service Liability for Retiree Health Care Benefits), and the Postal Service’s interaction with the federal budget (Federal Budget Treatment of the Postal Service).
In this newly released paper, the OIG and Hay Group’s analysis demonstrates that the method used to determine how CSRS pension costs for postal employees with service before 1971 are split between the Postal Service and the federal government is inequitable. As a result, the Postal Service was overcharged by $75 billion for payments to CSRS retirees from 1972 to 2009. The OIG suggests that this amount be returned to the Postal Service’s CSRS pension fund. Any excess above what is needed to fund CSRS liabilities could then be transferred to the Postal Service’s retiree health care fund, which would fully fund its health care liability and eliminate the need for further congressionally-required payments to the fund. All of the Postal Service’s current pension and health care obligations to its employees would then be fully funded.
The report further illustrates the inequity in the methodology used to determine the Postal Service’s contribution to the CSRS fund. Key findings from the report:
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source: U.S Postal Service Office Of Inspector General