[Federal Register Volume 67, Number 90 (Thursday, May 9, 2002)]
[Notices]
[Pages 31707-31708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11571]


-----------------------------------------------------------------------

OFFICE OF PERSONNEL MANAGEMENT


Federal Employees Retirement System; Normal Cost Percentages

AGENCY: Office of Personnel Management.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is providing notice 
of revised normal cost percentages for employees covered by the Federal 
Employees Retirement System (FERS) Act of 1986.

DATES: The revised normal cost percentages are effective at the 
beginning of the first pay period commencing on or after October 1, 
2002.
    Agency appeals of the normal cost percentages must be filed no 
later than November 12, 2002.

ADDRESSES: Send or deliver agency appeals of the normal cost 
percentages to the Board of Actuaries, care of Frank D. Titus, 
Associate Director for Retirement and Insurance, Office of Personnel 
Management, Room 4A10, 1900 E Street, NW., Washington, DC 20415.
    Send requests for actuarial assumptions and data to the Office of 
the Actuary, Room 4307 STOP, Office of Personnel Management, 
Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Patrick Jennings, (202)-606-0299.

SUPPLEMENTARY INFORMATION: The FERS Act of 1986, Pub. L. 99-335, 
created a new retirement system intended to cover most Federal 
employees hired after 1983. Most Federal employees hired before 1984 
are under the older Civil Service Retirement System (CSRS). Section 
8423 of title 5, United States Code, as added by the FERS Act of 1986, 
provides for the payment of the Government's share of the cost of the 
retirement system under FERS. Employees' contributions are established 
by law and constitute only a small fraction of the cost of funding the 
retirement system; employing agencies are required to pay the remaining 
costs. The amount of funding required, known as ``normal cost,'' is the 
entry age normal cost of the provisions of FERS that relate to the 
Civil Service Retirement and Disability Fund (Fund). The normal cost 
must be computed by OPM in accordance with generally accepted actuarial 
practice and standards (using dynamic assumptions). Subpart D of Part 
841 of Title 5, Code of Federal Regulations, regulates how normal costs 
are determined.
    The Board of Actuaries of the Civil Service Retirement System 
approved a revised set of economic assumptions for use in the dynamic 
actuarial valuations of CSRS and FERS. These assumptions were adopted 
after the Board reviewed statistical data prepared by the OPM actuaries 
and considered trends that may affect future experience under the 
Systems.
    Based on its analysis, the Board concluded that it would be 
appropriate to assume a rate of investment return of 6.75%, a reduction 
of .25% from the current rate of 7%. The Board reduced the anticipated 
rate of inflation from 4% to 3.75% and retained the projected rate of 
General Schedule salary increases at 4.25%. These salary increases are 
in addition to assumed in-grade increases that reflect past experience.
    The new assumptions anticipate that over the long term the annual 
rate of investment return will exceed inflation by 3% and General 
Schedule salary increases will exceed inflation by .5% a year, as 
compared to 3% and .25%, respectively, under the previous assumptions.
    The Board also adopted new demographic or ``non-economic'' 
assumptions. The new demographic rates are based on methodology adopted 
by the Board in November 2000, in conjunction with its comprehensive 
review of an extensive 10-year experience study prepared by the OPM 
actuaries.
    The normal cost calculations depend on both the economic and 
demographic

[[Page 31708]]

assumptions. The demographic assumptions are determined separately for 
each of a number of special groups, in cases where separate experience 
data is available. Based on the new economic assumptions and 
demographic factors, OPM has determined the normal cost percentage for 
each category of employees under Sec. 841.403 of Title 5, Code of 
Federal Regulations. The Government-wide normal cost percentages, 
including the employee contributions, are as follows:

------------------------------------------------------------------------
                                                                Percent
------------------------------------------------------------------------
Members......................................................       17.1
Congressional employees......................................       17.2
Law enforcement officers, firefighters, and employees under         24.0
 section 302 of the Central Intelligence Agency Act of 1964
 for Certain Employees.......................................
Air traffic controllers......................................       23.2
Military reserve technicians.................................       14.0
Employees under section 303 of the Central Intelligence             16.5
 Agency Act of 1964 for Certain Employees (when serving
 abroad).....................................................
All other employees..........................................       11.5
------------------------------------------------------------------------

    Under Sec. 841.408 of Title 5, Code of Federal Regulations, these 
normal cost percentages are effective at the beginning of the first pay 
period commencing on or after October 1, 2002.
    The time limit and address for filing agency appeals under 
Secs. 841.409 through 841.412 of Title 5, Code of Federal Regulations, 
are stated in the DATES and ADDRESSES sections of this notice.

Office of Personnel Management.
Kay Coles James,
Director.
[FR Doc. 02-11571 Filed 5-8-02; 8:45 am]
BILLING CODE 6325-50-P