[Federal Register Volume 79, Number 98 (Wednesday, May 21, 2014)]
[Notices]
[Pages 29224-29225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-11771]



[[Page 29224]]

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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, 
2014. Agency appeals of the normal cost percentages must be filed no 
later than November 21, 2014.

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, Senior Actuary, Office of 
Planning and Policy Analysis, Office of Personnel Management, Room 
4307, 1900 E Street NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Karla Yeakle, (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 portion 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.
    In its meeting on July 13, 2012, the Board of Actuaries of the 
Civil Service Retirement System (the Board) reviewed statistical data 
prepared by the OPM actuaries and considered trends that may affect 
future experience under FERS. The Board recommended changes to certain 
economic assumptions and also changes to the demographic assumptions 
used in the actuarial valuations of FERS. OPM has adopted the Board's 
recommendations.
    With regard to the economic assumptions described under section 
841.402 of title 5, Code of Federal Regulations, used in the actuarial 
valuations of FERS, the Board concluded that it would be appropriate to 
assume a rate of investment return of 5.25 percent, a reduction of 0.50 
percent from the existing rate of 5.75 percent. In addition, the Board 
determined that the assumed inflation rate should remain at 3.00 
percent and that the projected rate of General Schedule salary 
increases should be reduced 0.50 percent from 3.75 percent to 3.25 
percent. These salary increases are in addition to assumed within-grade 
increases. The Board's recommendation adjusts the nominal rates to 
balance long-term expectations with recent experience. The economic 
assumptions anticipate that, over the long term, the annual rate of 
investment return will exceed inflation by 2.25 percent and General 
Schedule salary increases will exceed long-term inflation by 0.25 
percent a year, both a decrease of 0.50 percent from the previous 
assumptions. In addition, the Board also adopted changes to the 
demographic assumptions listed as factors under section 841.404(a) of 
title 5, Code of Federal Regulations.
    The normal cost calculations depend on 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 changed demographic and economic 
assumptions described above, OPM has determined the normal cost 
percentage for each category of employees under section 841.403 of 
title 5, Code of Federal Regulations.
    Section 5001 of Public Law 112-96, The Middle Class Tax Relief and 
Jobs Creation Act of 2012, established provisions for FERS Revised 
Annuity Employees (FERS-RAE). The law permanently increases the 
retirement contributions by 2.30 percent of pay for these employees. 
Separate normal cost rates will apply for FERS-RAE.
    The Governmentwide normal cost percentages, including the employee 
contributions, are as follows:

Normal Cost Percentages for FERS and FERS-Revised Annuity Employee (RAE)
                                 Groups
------------------------------------------------------------------------
                                            FERS normal      FERS-RAE
                  Group                        cost         normal cost
                                             (percent)       (percent)
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Members.................................            21.5            14.2
Congressional employees, except members             19.7            14.2
 of the Capitol Police..................
Congressional employees who are members             19.7            19.7
 of the Capitol Police..................
Law enforcement officers, members of the            30.1            30.1
 Supreme Court Police, firefighters,
 nuclear materials couriers, customs and
 border protection officers, and
 employees under section 302 of the
 Central Intelligence Agency Retirement
 Act of 1964 for certain employees......
Air traffic controllers.................            32.4            32.5
Military reserve technicians............            17.7            18.1
Employees under section 303 of the                  19.7            19.9
 Central Intelligence Agency Retirement
 Act of 1964 for certain employees (when
 serving abroad)........................
All other regular FERS employees........            14.0            14.2
------------------------------------------------------------------------

    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, 2014.
    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.


[[Page 29225]]


U.S. Office of Personnel Management.
Katherine Archuleta,
Director.
[FR Doc. 2014-11771 Filed 5-20-14; 8:45 am]
BILLING CODE 6325-38-P