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News Release

Wednesday, May 3, 2006
Contact: Michael Orenstein
Tel: 202-606-2402

OPM Awards Retirement Systems Modernization Contract

RSM Establishes Electronic Format to Compute and Expedite the Payment of Federal Retirement Benefits

Washington, D.C. - The U.S. Office of Personnel Management today took a major step in delivering to retiring federal employees their first full annuity payment on the day it is due, eliminating the need for interim partial payments.

With the signing of a Retirement Systems Modernization (RSM) contract with Hewitt Associates, of Lincolnshire, Illinois, OPM has made a commitment to technology, as well as to current and future federal employees. This commitment will improve the storage, retrieval and transfer of employment and benefits information, thereby easing the transition of employees from the work place to retirement.

"When fully operational, RSM and the Defined Benefits Technology Solution will improve the quality and timeliness of services OPM and employing agencies provide to federal employees and retirees," said OPM Director Linda M. Springer. "Many of the best-run companies in America offer similar benefits services to their employees, and we will do the same. With this technological advancement, we are telling federal employees and people considering federal careers that we respect their professional standards, as well as their personal needs. By simplifying the maintenance and transfer of these records and by providing timely and quality services, we improve the overall experience of working for the federal government."

At the heart of RSM is a Defined Benefits Technology Solution (DBTS) contract, which will provide a paperless, "cradle to grave" benefits service delivery model. The DBTS - an electronic solution - will give employees, retirees and authorized agency officials open and immediate online access to retirement-related records and benefits elections, including those which have been converted from paper files into electronic format.

For example, an active employee with a personal computer can peruse his or her personnel records online and notify the appropriate agency official of an error in a period of employment; or, a federal retiree might use the online access to make changes to their health or life insurance benefits. The system also can be accessed via Interactive Voice Recognition (IVR).

Going paperless and expediting retirement processing are initiatives in President Bush's Management Agenda.

Another user-friendly function of the DBTS will let employees view their federal employment history and salary, and enter their Social Security or Thrift Savings Plan information to calculate real-time personal retirement benefits; the Technology Solution also would allow employees to "model" retirement benefits by projecting years of employment and future salary increases, greatly enhancing the ability to pro-actively manage finances and plan for retirement.

"With the ability to get a complete online look at retirement-related data, employees and HR officials have the advantage of planning for various milestones in an employee's career, including retirement," said Springer.

The Defined Benefits Technology Solution - one of three RSM components - moves OPM and federal agencies to an electronic environment, ending the government's reliance on paper, retirement-related records. RSM's two other components - Electronic Record Keeping and Business Transformation - will be addressed in the future and under separate contracts.

The DBTS allows for continuous, real-time updating of an employee's retirement-relevant information, giving OPM an immediate and complete view of information needed to compute retirement benefits. With the total information package, OPM can quickly compute and authorize the full retirement benefit, instead of placing the newly retired employee into a temporary, partial-payment status.

Over the past few years, OPM's annual receipt of retirement applications has risen steadily. The increase in retirement claims is due largely to the first wave of baby-boom retirements, a phenomenon not expected to peak until 2010.

Included in the electronic data viewed and accessed by agencies and OPM upon an employee's retirement is information on employment service and salary, health and life insurance enrollment levels, accrued sick leave and designations of beneficiaries. This data will be received by the DBTS through recurring electronic updates from agency HR and payroll systems. Retirement-relevant data also will be converted from paper records into an electronic format for all active employees.

The 10-year performance based contract with Hewitt Associates is valued at approximately $290 million.

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The U.S. Office of Personnel Management (OPM) is the leader in workforce management for the federal government. Our agency builds, strengthens, and serves a federal workforce of 2.2 million employees with programs like hiring assistance, healthcare and insurance, retirement benefits, and much more. We provide agencies with policies, guidance, and best practices for supporting federal workers, so they can best serve the American people.

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