[Federal Register Volume 72, Number 109 (Thursday, June 7, 2007)]
[Notices]
[Page 31631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11084]


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OFFICE OF PERSONNEL MANAGEMENT


Federal Employees' Retirement System; Normal Cost Percentages

AGENCY: Office of Personnel Management.

ACTION: Notice.

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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, 
2007. Agency appeals of the normal cost percentages must be filed no 
later than December 7, 2007.

ADDRESSES: Send or deliver agency appeals of the normal cost 
percentages and requests for actuarial assumptions and data to the 
Board of Actuaries, care of Gregory Kissel, Manager, Office of 
Actuaries, Strategic Human Resources Policy Division, Office of 
Personnel Management, Room 4307, 1900 E Street, NW., Washington, DC 
20415.

FOR FURTHER INFORMATION CONTACT: Jessica Johnson, (202) 606-0299.

SUPPLEMENTARY INFORMATION: The FERS Act of 1986, Public Law 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 
practices and standards (using dynamic assumptions). Subpart D of part 
841 of title 5, Code of Federal Regulations, regulates how normal costs 
are determined.
    Recently, 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 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 
System.
    Based on its analysis, the Board concluded that it would be 
appropriate to assume a rate of investment return of 6.25 percent, with 
no difference from the current rate of 6.25 percent. The Board 
increased the anticipated inflation rate from 3.25 percent to 3.50 
percent, and increased the projected rate of General Schedule salary 
increases from 4.00 percent to 4.25 percent. These salary increases are 
in addition to assumed within-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 2.75 percent and 
General Schedule salary increases will exceed inflation by .75 percent 
a year, as compared to 3 percent and .75 percent, respectively, under 
the previous assumptions. In addition, the Board found changes in all 
the demographic assumptions listed as factors under Sec.  841.404(a) of 
title 5, Code of Federal Regulations.
    The normal cost calculations depend on both the economic and 
demographic 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 the change in the demographic assumption, OPM has 
determined the normal cost percentage for each category of employees 
under Sec.  841.403 of title 5, Code of Federal Regulations. The 
Governmentwide normal cost percentages, including the employee 
contributions, are as follows:

------------------------------------------------------------------------
                                                                Percent
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Members......................................................       18.6
Congressional employees......................................       17.1
Law enforcement officers, members of the Supreme Court              26.2
 Police, firefighters, nuclear materials couriers and
 employees under section 302 of the Central Intelligence
 Agency Retirement Act of 1964 for Certain Employees.........
Air traffic controllers......................................       25.8
Military reserve technicians.................................       14.8
Employees under section 303 of the Central Intelligence             17.0
 Agency Retirement Act of 1964 for Certain Employees (when
 serving abroad).............................................
All other employees..........................................       12.0
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    Under section 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, 2007.
    The time limit and address for filing agency appeals under sections 
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.
Linda M. Springer,
Director.
[FR Doc. E7-11084 Filed 6-6-07; 8:45 am]
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