[Federal Register Volume 59, Number 144 (Thursday, July 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18369]


[Federal Register: July 28, 1994]


                                                   VOL. 59, NO. 144

                                            Thursday, July 28, 1994

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 842

RIN 3206-AF92


Federal Employees Retirement System--Coverage

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

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SUMMARY: The Office of Personnel Management (OPM) is proposing 
regulations concerning exclusions from coverage under the Federal 
Employees Retirement System (FERS) for employees who have at least 5 
years of service creditable under the Civil Service Retirement System 
(CSRS). These regulations would clarify the existing regulations to 
specifically state the requirement that, if the employee has a break in 
service ending after 1986, the employee's past service must include 
some service covered by CSRS to be excluded from automatic FERS 
coverage. The regulations are necessary to clarify the current 
regulations and to conform to OPM's guidance since implementation of 
FERS.

DATES: Comments must be received on or before September 26, 1994.

ADDRESSES: Send comments to Reginald M. Jones, Jr., Assistant Director 
for Retirement Policy Development; Retirement and Insurance Group; 
Office of Personnel Management; P.O. Box 57; Washington, DC 20044; or 
deliver to OPM, Room 4351, 1900 E Street SW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Harold L. Siegelman, (202) 606-0299.

SUPPLEMENTARY INFORMATION: The general rule that a Federal employee who 
is covered by social security is automatically covered by the Federal 
Employees Retirement System (FERS) unless the employee is excluded from 
FERS coverage by statute or regulation is stated in section 842.103 of 
Title 5, Code of Federal Regulations. (FERS coverage is available only 
to employees covered by social security. See generally definition of 
employee under 5 CFR 842.102.) However, our current coverage 
regulations present many of the statutory exclusions to FERS coverage 
in terms of election rights that belong in part 846 of Title 5, Code of 
Federal Regulations. To simplify the regulations, we propose to revise 
sections 842.101 and 842.104 to limit the scope of subpart A of part 
842 to automatic FERS coverage, leaving the regulation of all transfer 
issues to part 846.
    Section 8402(b) of title 5, United States Code, establishes the 
statutory exclusions from coverage under FERS. The regulations 
implementing this provision are contained in section 842.104 of Title 
5, Code of Federal Regulations. These proposed regulations seek to 
clarify the regulations and eliminate redundancies in a manner 
consistent with OPM's implementation of FERS since the system's 
inception.
    Section 8402(b)(1) of title 5, United States Code, excludes certain 
senior officials from automatic FERS coverage.
    The statute applies to senior officials who were placed under 
mandatory social security coverage at the beginning of 1984 and who 
have continuous service since December 31, 1983. Proposed section 
842.104(b) would use essentially the same language as our current 
section 842.104(c) of Title 5, Code of Federal Regulations, to 
implement this paragraph.
    Section 8402(b)(2) of title 5, United States Code, provides two 
mutually exclusive sets of exclusions from automatic FERS coverage. 
Subparagraph (A) applies to employees who reenter service on or after 
January 1, 1987 (the general effective date of the FERS Act of 1986) 
after a break in service. Subparagraph (B) applies to employees not 
covered by subparagraph (A), specifically, employees who have served 
continuously since December 31, 1986. OPM has applied this approach to 
the exclusion since the inception of FERS.
    Employees who have had a break in service ending after December 31, 
1986, are excluded from automatic FERS coverage if they satisfy the 
two-part test under subparagraph (A). The two-part test requires both 
some service (at least 1 day) covered by the Civil Service Retirement 
System (CSRS) or the Foreign Service Retirement System (FSRS) and at 
least 5 years of civilian service creditable under CSRS rules as of the 
last separation from service. Proposed section 482.104(c) would revise 
our current section 842.104(b) of Title 5, Code of Federal Regulations, 
to clarify our existing regulation that implements this provision.
    Employees who have not had a break in service ending after December 
31, 1986, are excluded from automatic FERS coverage if they satisfy the 
one-part test under subparagraph (B). These employees are excluded from 
automatic FERS coverage--even if they have no prior service covered by 
CSRS or FERS--as long as they did have at least 5 years of creditable 
civilian service (under CSRS rules) before January 1, 1987. Proposed 
section 842.104(d) would merge and revise current paragraphs (a) and 
(e) of section 842.104 of Title 5, Code of Federal Regulations, to 
simplify and clarify the regulations. Paragraph (e) particularly needs 
to be revised because the regulatory text does not show that it applies 
only to employees with just social security coverage such as those 
serving under multiple term appointments continuously since December 
31, 1986. The supplementary information in our notice of interim 
rulemaking (published at 51 FR 47195, 47196, on December 31, 1986) 
states the intended scope of this paragraph, which also reflects our 
guidance to the employing agencies that make these determinations.
    Proposed section 842.104(e) defines a break in service for the 
purpose of applying these rules as a separation from CSRS-covered 
service lasting more than 3 days, consistent with our general practice. 
However, in unusual circumstances employees will also be considered to 
have had a break in service in situations in which there may be no 
period of separation from service but the individual acquires automatic 
social security coverage (e.g., when a District of Columbia employee 
who is excluded from social security transfers to a Federal position).
    Proposed section 842.104(e) restates the current section 842.104(f) 
applicable to certain employees who have exercised their election 
rights under section 8461(n) of title 5, United States Code, to retain 
coverage under a retirement system for employees of nonappropriated 
fund instrumentalities.
    OPM's guidance on making coverage determinations is not affected by 
these amendments, which are intended to clarify the regulations and 
ensure that they will be interpreted correctly and in accordance with 
our existing guidance, ``The CSRS and FERS Handbook for Personnel and 
Payroll Offices'' (formerly FPM Supplement 830-1), chapter 10.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because the regulation 
will only affect Federal employees and agencies and retirement payments 
to retired Government employees and their survivors.

List of Subjects in 5 CFR Part 842

    Administrative practice and procedure, Air traffic controllers, 
Firefighters, Government employees, Law enforcement officers, Pensions, 
Reporting and recordkeeping, Retirement.

U.S. Office of Personnel Management.
Lorriane A. Green,
Deputy Director.

    Accordingly, OPM proposes to amend 5 CFR part 842 as follows:

PART 842--FEDERAL EMPLOYEES RETIREMENT SYSTEM--BASIC ANNUITY

    1. The authority citation for part 842 continues to read as 
follows:

    Authority: 5 U.S.C. 8461(g); Secs. 842.104 and 842.106 also 
issued under 5 U.S.C. 8461(n); Sec. 842.105 also issued under 5 
U.S.C. 8402(c)(1) and 7701(b)(2); Sec. 842.106 also issued under 
section 7202 (m)(2) of the Omnibus Budget Reconciliation Act of 
1990, Pub. L. 101-508 and 5 U.S.C. 8402(c)(1); Secs. 842.604 and 
842.611 also issued under 5 U.S.C. 8417; Sec. 842.607 also issued 
under 5 U.S.C. 8416 and 8417; Sec. 842.614 also issued under 5 
U.S.C. 8419; Sec. 842.615 also issued under 5 U.S.C. 8418; 
Sec. 842.703 also issued under section 7001 (a)(4) of the Omnibus 
Budget Reconciliation Act of 1990, Pub. L. 101-508; Sec. 842.707 
also issued under section 6001 of the Omnibus Budget Reconciliation 
Act of 1987, Pub. L. 100-203; Sec. 842.708 also issued under section 
4005 of the Omnibus Budget Reconciliation Act of 1989, Pub. L. 101-
239 and section 7001 of the Omnibus Budget Reconciliation Act of 
1990, Pub. L. 1001-508; subpart H also issued under 5 U.S.C. 1104.

Subpart A--Coverage

    2. Section 842.101 is revised to read as follows:


Sec. 842.101  Purpose and scope.

    (a) This subpart contains regulations concerning automatic coverage 
under the Federal Employees Retirement System (FERS). References to 
FERS coverage in this subparts are to automatic, as opposed to 
elective, FERS coverage.
    (B) Part 846 of this chapter contains regulations concerning 
elective FERS coverage. FERS elections are available under limited 
circumstances to employees not subject to automatic FERS coverage.
    3. Section 842.104 is revised to read as follows:


Sec. 842.104  Statutory exclusions.

    (a) Lack of social security coverage. An individual not covered by 
social security (title II of the Social Security Act and chapter 21 of 
the Internal Revenue Code of 1954), including an individual covered by 
full CSRS (and thereby excluded from social security coverage), is 
excluded from FERS coverage.
    (b) Senior officials subject to social security coverage despite 
continuous service. An individual who has served without a break in 
service of more than 365 days since December 31, 1983, in one or more 
of the following positions is excluded from FERS coverage.
    (1) The Vice President;
    (2) A Member of Congress;
    (3) A non-SES appointee to a position listed in 5 U.S.C. 5312 
through 5317;
    (4) A Senior Executive Service or Senior Foreign Service noncareer 
appointee; or
    (5) An individual appointed by the President (or his designee) or 
the Vice President under section 105(a)(1), 107(a)(1), or (b)(1) of 
title 3, United States Code, to a position for which the maximum rate 
of basic pay is at or above the rate for Level V of the Executive 
Schedule.
    (c) Employees rehired after December 31, 1986, following a break in 
service. An employee who is rehired after December 31, 1986, who has 
had a break in service and who, at the time of the last separation from 
the service, had at least 5 years of civilian service creditable under 
CSRS rules, any part of which was covered by CSRS or the Foreign 
Service Retirement System, is excluded from FERS coverage.
    (d) Employees who have not had a break in service ending after 
December 31, 1986. An employee who has not had a break in service of 
more than 3 days ending after December 31, 1986, and who, as of 
December 31, 1986, has at least 5 years of creditable civilian service 
under CSRS rules (even if none of this service was covered by CSRS), is 
excluded from FERS coverage.
    (e) Break in service. For the purposes of paragraph (c) and (d) of 
this section, ``break in service'' means a separation from CSRS-covered 
service lasting at least 4 days, or a transfer or separation of less 
than 4 days when the employee becomes subject to automatic coverage 
under social security (title II of the Social Security Act and chapter 
21 of the Internal Revenue Code of 1954).
    (f) Coverage under a retirement system for NAF employees. An 
employee who has elected coverage under a retirement system for NAF 
employees in accordance with Sec. 842.106 is excluded from FERS 
coverage during that and all subsequent periods of service, including 
service as reemployed annuitant.

[FR Doc. 94-18369 Filed 7-27-94; 8:45 am]
BILLING CODE 6325-01-M