Retirement calculator suffered from coding error; senators press for more answers

The Consumer Financial Protection Bureau told the chairmen of two Senate financial committees it fixed an “isolated coding error” in its retirement planning calculator, but those senators said many questions remain unanswered.

In a letter to Sens. Mike Enzi (R-Wyo.) and Richard Shelby (R-Ala.), CFPB Director Richard Cordray said there are legitimate reasons why the agency’s retirement calculator produced different results from a similar tool available on the Social Security Administration’s website.

“The Bureau appreciates the Committee’s concern regarding certain differences in estimates,” Cordray wrote. “We share this concern, so Bureau staff worked to ensure our tool is both informative and reliable … bureau staff was aware that our methodology for generating estimates would lead to some differences in estimates but concluded that these differences did not undermine the intended purpose of the tool, which is to show users the impact of their claiming age decision. Additionally, the Bureau found that one of the discrepancies noted in your letter, which concerned retroactive benefits, was the result of an isolated coding error, which was promptly corrected using internal resources.”

In response, Enzi, chairman of the Senate Budget Committee, and Shelby, chairman of the Senate Committee on Banking, Housing and Urban Affairs, called the CFPB director’s response “inadequate and unresponsive,” since it failed to answer most of their questions.

“The CFBP planner always displays the wrong amount for users who chose any retirement age other than the full retirement age,” Enzi and Shelby wrote in a March 9letter. “You have described the Bureau as one of the most accountable agencies in the government.  And yet, you have failed to fully answer our questions or address the numerous errors in the CFPB planner despite our urging you to do so.”

Cordray said the CFPB developed its own online retirement planner, separate from the more comprehensive one on SSA’s website, in order to give prospective retirees a better look at their benefits if they decide to retire earlier or later than their full retirement age, which varies between 65 and 67 for most retirees.

“Estimates by our tool are thus based on current formulas at SSA, not a user’s actual earnings record. While these tools are generally more accurate, they collect and rely on much more personal information about a consumer. The Bureau wanted to provide an easy and quick way for consumers to obtain estimates without requiring users to provide the data.”

SSA’s Quick Calculator typically provides most users with their expected benefits at ages 62 and 70.

“The Bureau created a tool that displayed the effects on the monthly benefit of claiming earlier and later without showing the additional effects from working longer,” Cordray said. “In this way, the Bureau designed a tool that provided users with readily-available information about their claiming choices, as well as benefits at different ages, while minimizing usability barriers.”

Cordray said CFPB staff, led by the Office for Older Americans, used mostly internal resources to develop the retirement calculator, and that prior to public release, tested it through a contractor that already held a contract with the agency. He also said that CFPB collaborated with SSA during development.

“The Bureau took a number of steps to avoid duplication of effort with SSA,” he said. “We had conversations with SSA to understand its calculators and to determine how we could incorporate elements of their tools into ours while also providing consumers with unique features.”

While the senators acknowledged that the most obvious problems have been fixed, they said the CFPB calculator gives out incorrect information.

“For users ages 62 through 65, the planner still computes annual benefits for the current year as the monthly amount multiplied by twelve, regardless of the user’s actual birth month. Consumers who turn 62 in January will be told their annual benefit is twelve times the monthly amount even if they wait until December to use the planner,” the senators wrote.