OPM sets June 2 deadline for new retirement applications to be electronic 

The Office of Personnel Management is giving agencies less than a month to start submitting all new retirement applications for federal employees electronically, moving away from a largely paper-based system.

In a Wednesday memo, OPM acting Director Charles Ezell gave agencies that are served by the National Finance Center and Interior Business Center — two federal shared services providers offering HR support — a deadline of June 2 to start processing retirements electronically. According to the memo, OPM will facilitate applications via the Online Retirement Application effective July 15 and won’t accept paper filings.

The federal retirement system managed by OPM has in the past faced criticism for its delays. In 2019, the Government Accountability Office identified reliance on paper-based and manual processing as among the reasons for the lack of speed. While there have long been efforts to modernize that system, it has yet to go fully electronic.

Now, President Donald Trump’s Department of Government Efficiency has taken an interest in the system. Elon Musk called it out specifically in an Oval Office press conference in February, describing the “mine” where the paper records are kept and manual processing. “The elevator breaks down sometimes and then … nobody can retire,” Musk said.

Later that month, OPM touted in a video posted to X that it had processed the first digital retirement. The Wednesday guidance suggests it’s scaling that process quickly.

According to the memo, training and onboarding will be available to all agencies participating and must be completed by June 2. If agencies don’t use either of the two shared services providers, OPM is providing a “complementary method for electronic submissions.”

“OPM will coordinate directly with payroll providers to ensure all agencies they service will have access to ORA in the near future,” Ezell wrote.

The memo follows OPM’s decision last week to award Workday a sole-source contract for end-to-end HR services worth $342,200. 

In a justification document published to SAM.gov May 2, the same day that the contract was awarded, OPM said a sole-source award was needed “due to an urgent confluence of operational failures and binding federal mandates that require immediate action.” Sole source awards are made to a single company without a bidding process.

The justification cited the agency’s “fragmented and outdated HR systems” and said they’ve “reached a critical failure point, resulting in payroll errors, benefits disruptions, and a manual workload that is no longer sustainable.” Moreover, it said Trump’s efforts to restructure the federal workforce require “real-time workforce data and integrated HR capabilities that OPM’s current systems cannot deliver.”

It also specifically cited the paper-based retirement system as something the new system could address, noting that “increased retirements due to federal workforce reductions place a strain on OPM’s paper-based retirement system, a process which normally takes 3-5 months, a problem an integrated system will help solve.”

OPM estimated that holding a competition for the award would result in a six- to nine-month delay in the award and would risk compliance and cost issues. The system needs to be implemented “as close as possible to July 15, 2025,” which is when the federal hiring freeze lifts, OPM said. 

If the system were delayed beyond that deadline, the workforce agency said it would risk failing to comply with deadlines set by the White House Office of Management and Budget, disrupting retirement services, and over $600,000 “in labor-intensive workaround costs.”

OPM said Workday is the only company with a solution able to meet its needs and cited its deployment at Walmart and the Department of Energy as examples of its scalability and readiness for federal use, respectively. The agency also noted that Dayforce, another HR solutions company, expressed interest during its research but that it determined Workday was the only option for its needs. 

Following the one-year contract for Workday, OPM said it plans to have “a full and open competition.”

This story was updated May 8 with additional details about the contract award to Workday.