These organizations seem almost organic, an emergent phenomenon that protects it's own existence. How does one kill a bureaucracy? It's times like these I'm tempted to throw my support behind the "Eric Schmidt for CEO of America" stunt.
The other point to note is that they are already partly computerized, as the article admits. Part of the problem may be that retirement systems have strong backward compatibility requirements by their nature. So this is actually a problem that might fix itself given another decade or two, as more people's files become fully electronic.
It seems to me that (as often) announcing a big project to try to fix it all in one go is just bound to fail. Instead, the best way forward would probably be a small number of competent people who are given the freedom to refactor the process from within. A good starting point seems to be to reduce the number of computer -> paper -> computer turnarounds that seem to exist with the current system.
To those who are saying here "Privatizing isn't a miracle solution", since, ahem, you are trying to preempt the libertarian argument since you sense that it's a rather strong one here, well, of course it's not a miracle cure, but in general in the private world you can't get this level of brokenness in the feedback loop. Somebody would have had to do something decades ago because this would have gone out of business, or some equivalent. Private industry's advantage here isn't that it could somehow fix this problem, it is that it has the "advantage" of being unable to sustain this level of pathology in the first place. Before you post your example of equal pathology in the private field, my question to you would be, has that pathology been present for 40 years? Some private entities do indeed become healthy enough and bank enough funds to be able to descend into this level of pathology, but they can't do it indefinitely; eventually they must either clean up their act (IBM) or go out of business.
And when we talk about "big government", it isn't always literal size... sometimes it's things like an enormous maze of interlocking regulations that nobody ever asked "Does the costs of this regulation exceed the benefit when combined with our other enormous pile of regulations?" Obviously, Federal government workers are going to get their retirement benefits, and growing the employment of the mine isn't going to particularly cause sudden new regulatory overreach or anything. The literal physical human footprint is not intrinsically a problem. But this is "big government" at its worst, a regulatory footprint so large it half paralyzes itself... is there really anybody who would argue in favor of this? (We can't even particularly argue that we are better off with this particular department paralyzed on some weird libertarian "better a paralyzed bureaucracy than an efficient one" freedom argument... who benefits from this accounting being this slow?)
Bureaucracy doesn't have to be a dirty word, although we're all disgusted by the waste it can cause. Especially I see in the U.S. where government systems tend to be waayy worse than I'd experienced working within the government in Canada.
Even banks have a different internal character between the US and Canada; at least the one Canadian bank I've worked in simply did a much better job of having a functioning, appropriate systemized bureaucratic means of operation than the inane politicking-slowpoke-dysfunctional bureaucracies of some of their competitors.
A few of my friends at Google have complained about bureaucracy there, so shrug I'm not sure Eric Schmidt would exactly be our saviour here.
Essentially you try to make a system that "fits all cases"... with every possible permutation. Bound to fail, actually.
http://www.gao.gov/products/GAO-13-580T
"Risk management: OPM did not have a process for identifying and tracking project risks and mitigation strategies on a regular basis. Thus, it lacked a mechanism to address potential problems that could adversely impact the cost, schedule, and quality of the modernization effort.
Organizational change management: OPM had not adequately prepared its staff for changes to job responsibilities resulting from the modernization by developing a detailed transition plan. This could lead to confusion about roles and responsibilities and hinder effective system implementation.
Testing: The results of tests 1 month prior to the deployment of a major system component revealed that it had not performed as intended. These defects, along with a compressed testing schedule, increased the risk that the system would not work as intended upon deployment."
and on and on.