[Federal Register Volume 59, Number 192 (Wednesday, October 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24454]


  Federal Register / Vol. 59, No. 192 / Wednesday, October 5, 1994 /
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[[Page Unknown]]

[Federal Register: October 5, 1994]


                                                   VOL. 59, NO. 192

                                         Wednesday, October 5, 1994

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 846

RIN: 3206-AE01

 

Deemed Elections of Coverage Under the Federal Employees 
Retirement System

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is adopting, as 
final, its interim regulations to allow employees to remain covered by 
the Federal Employees Retirement System (FERS), if their employing 
agency erroneously placed them under FERS during the period when they 
would have had the opportunity to elect FERS coverage. These 
regulations deem employees to have elected FERS coverage unless they 
notify the employing agency that they do not want to be deemed to have 
elected FERS. These regulations are necessary to prevent the agency 
error from depriving such employees of their statutory right to have 
elected FERS coverage.

EFFECTIVE DATE: November 4, 1994.

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

SUPPLEMENTARY INFORMATION: On September 13, 1993, we published (at 58 
FR 47821) interim regulations to allow employees to remain covered by 
the Federal Employees Retirement System (FERS), if their employing 
agency erroneously placed them under FERS during the period when they 
would have had the opportunity to elect FERS coverage. The interim 
regulations establish a procedure under which employees (who were 
denied the opportunity to elect FERS coverage because their employing 
agency erroneously placed them under FERS) would be deemed to have 
elected FERS coverage unless they notify the employing agency that they 
do not want to be deemed to have elected FERS. We designed the 
procedure to minimize the actions that both an agency and an employee 
would be required to perform to correct records. We received four 
comments on the interim regulations.
    All of the comments were supportive of the concept of allowing this 
group of employees the opportunity to have FERS coverage. The 
commenters expressed their concerns with specific aspects of our 
interim method for choosing FERS coverage.
    One commenter expressed concern that our proposal was too narrow 
because it failed to cover employees who were correctly placed under 
full CSRS, CSRS offset, or social security only, but were incorrectly 
or never informed of their opportunity to elect FERS. We believe that 
the decision of the United States Court of Appeals for the Federal 
Circuit in Killip v. Office of Personnel Management, 991 F.2d 1564 
(Fed. Cir. 1993), leaves us without authority to permit coverage 
elections except for the situation of employees who were incorrectly 
denied any right of election whatsoever during the election period 
provided by statute. Specifically, the court determined that OPM did 
not have authority to allow retroactive belated FERS elections made 
after June 30, 1988, on the basis that the employing agency provided 
incomplete information to the employee, or that the employee was 
otherwise prevented form making an informed election by circumstances 
beyond the employee's control.
    Although the court decision technically applies only to elections 
that should have been made during the 1987 open season, the court's 
analysis is equally applicable to cases of employees rehired after the 
open season. We believe that the court decision prevents us from 
allowing retroactive transfers by any employees who did have an 
opportunity to make an election, regardless of circumstances that may 
have prevented the employee from making an informed election. 
Accordingly, we could not adopt this suggestion.
    Three commenters requested that we provide more information about 
the procedures that agencies will be expected to follow when 
implementing the regulations. We will provide agencies with 
instructions on documenting elections and correction of records under 
these regulations in the usual manner, through a payroll office letter.
    Three commenters objected to the interim procedure that deems the 
employee to have elected FERS coverage unless the employee informs the 
agency of the desire not to be covered by FERS. Each objected for 
different reasons.
    The interim procedures were based on the premise that most 
employees who have been automatically covered by FERS in error will 
want to continue to be covered under FERS. One commenter questioned 
this premise. However, our experience in handling belated FERS election 
requests causes us to believe this premise is correct. We continue to 
believe that this procedure will cause the maximum number of employees 
to have the retirement coverage they want without having to elect out 
of FERS.
    One commenter suggested that we require an affirmative FERS 
election to obviate the need for agencies to develop procedures for 
handling requests to waive the time limit. The commenter also suggested 
that the ``open-ended nature of the passive election almost guarantees 
that there will be waiver requests and that agencies will feel 
obligated to grant them,'' resulting in longer periods for which the 
records will have to be corrected. The commenter states, ``The agency 
will also sustain additional losses in contributions to the Thrift 
Savings Plan. (Agencies forfeit automatic and matching contributions 
that are more than one year old.)'' While these problems will occur, we 
believe that requiring an affirmative FERS election, which, under 
Killip, would also require an inflexible time limit, would not be 
sufficiently responsive to the needs of the employee who has already 
been placed in a difficult situation because of an agency error. 
Agencies can avoid problems concerning waiver of the time limit by 
providing adequate counseling and follow-up procedures to assure that 
employees make informed choices during the 60-day period.
    Although the regulatory procedures deem employees to have elected 
FERS if the employee takes no action, we strongly encourage agencies to 
follow-up all cases involving these regulations and to obtain and 
document express (and written) elections whenever possible. We expect 
agencies to approve waivers of the time limit in which to decline the 
deemed election unless they can document that the employee did not act 
with reasonable diligence or that the employee made an informed choice 
of FERS. Because of the adverse consequence for agencies that the 
commenter noted, agencies should develop procedures to fully document 
their counseling efforts and employee elections.
    One commenter questioned the provisions concerning the rights of 
survivors. The regulations provide a special rule if an employee dies 
during the election period. Because the employee's election period 
ended prematurely due to death, the benefits payable to the survivor 
(either FERS or the benefits available in the absence of a deemed 
election) depend on whether the deemed election is forced upon the 
survivor. Because of the unique situation created by a deemed election, 
the regulations allow a survivor to decline the deemed election. In 
this way, we are assuring that the deemed election will not deprive a 
survivor of benefits established by statute, while providing what the 
employee and survivor would be anticipating (benefits under FERS) 
unless the survivor chooses otherwise.
    One commenter raised questions concerning eligibility of an 
employee to be deemed to have elected FERS when a former spouse is 
entitled to a portion of the employee annuity or a survivor annuity. 
Deemed elections are permitted only for employees who were eligible to 
elect FERS during the election period. Agencies will have to confirm 
eligibility by obtaining a certification from the employee concerning 
former spouses, similar to the certification required on the SF 3109, 
Election of FERS Coverage, or by obtaining telephone approval from our 
Court-Ordered Benefits Section.
    Two commenters specifically raised questions about the effective 
date of the deemed elections. The effective date is the later of the 
employee's entry-on-duty date or the beginning of the first pay period 
commencing after June 30, 1987. In devising the interim procedure we 
wanted to minimize the correction of records. If as we expect most 
employees affected by these regulations will want FERS coverage, 
records correction will be minimal. The only correction action required 
in cases of employees whose entry-on-duty date is on or after the 
beginning of the first pay period in July 1987, will be an SF-50 
showing that FERS coverage, as of the entry-on-duty date was by 
election, rather than automatic. Of course, if the employee was 
erroneously placed in FERS before the beginning of the first pay period 
of July 1987 or if the employee elects not to be covered by FERS, more 
substantial records corrections will be required. We will issue a 
payroll office letter to provide more details on correction of records.

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 846

    Administrative practice and procedure, Government employees, 
Pensions, Retirement.

    Accordingly, under authority of 5 U.S.C. 8461(g), OPM is adopting 
its interim rules under 5 CFR part 846 published on September 13, 1993, 
at 58 FR 47821, as final rules without change.

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

[FR Doc. 94-24454 Filed 10-4-94; 8:45 am]
BILLING CODE 6325-01-M