[Federal Register Volume 84, Number 97 (Monday, May 20, 2019)]
[Notices]
[Pages 22915-22916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-10292]
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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,
2019. Agency appeals of the normal cost percentages must be filed no
later than November 19, 2019.
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
Healthcare and Insurance, Office of Personnel Management, Room 4316,
1900 E Street NW, Washington, DC 20415.
FOR FURTHER INFORMATION CONTACT: Karla Yeakle, (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 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). The normal cost
calculations depend on economic and demographic assumptions. Subpart D
of part 841 of title 5, Code of Federal Regulations, regulates how
normal costs are determined.
In its meeting on June 1, 2017, the Board of Actuaries of the Civil
Service Retirement System (the Board) recommended revisions to the long
term economic assumptions and recommended changes to the demographic
assumptions used in the actuarial valuations of CSRS and FERS. The
economic assumptions have decreased from the previous long term
economic assumptions. The demographic assumptions include assumed rates
of mortality, employee withdrawal, retirement, and merit and longevity
pay increases. The revised demographic assumptions are generally based
on the recent ten-year or twenty-year experience under the retirement
systems, modified to reflect expected future experience where
applicable. OPM has adopted the Board's recommendations.
On October 25, 2017, OPM published revised regulations related to
the calculation of the FERS normal cost percentages. These regulations
clarified the employee categories OPM uses to compute the FERS normal
cost percentages and added a category of normal cost percentage for
employees of the U.S. Postal Service. Because these revised regulations
had not been published when the Board met on June 1, 2017, the
recommended demographic assumptions reflect expected government-wide
experience rather than separate postal-specific and non-postal specific
experience. For non-postal employees, the normal cost percentage will
reflect the economic assumptions and government-wide demographic
assumptions determined by the Board at its June 1, 2017, meeting. The
normal cost percentages for employees of the Postal Service will also
reflect the economic assumptions determined by the Board at its June 1,
2017, meeting but will use demographic assumptions that are based on
assumptions specific to the expected experience of postal employees.
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 4.50 percent, a reduction of 0.75
percent from the existing rate of 5.25 percent. In addition, the Board
determined that the assumed inflation rate should be reduced 0.50
percent from 3.00 percent to 2.50 percent, that the assumed rate of
FERS annuitant Cost of Living Adjustments should remain at 80 percent
of the assumed rate of inflation, and that the projected rate of
General Schedule salary increases should be reduced 0.50 percent from
3.25 percent to 2.75 percent. These salary increases are in addition to
assumed within-grade increases. These assumptions are intended to
reflect the long term expected future experience of the Systems.
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 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.
Subsequently, Section 401 of Public Law 113-67, the Bipartisan Budget
Act of 2013, created another class of FERS coverage, FERS-Further
Revised Annuity Employee (FERS-FRAE). Employees subject to
[[Page 22916]]
FERS-FRAE must pay an increase of 1.30 percent of pay above the
retirement contribution percentage set for FERS-RAE. Separate normal
cost percentages apply for employees covered under FERS-RAE and for
employees covered under FERS-FRAE.
The normal cost percentages for each category of employee,
including the employee contributions, are as follows:
Normal Cost Percentages for FERS, FERS-Revised Annuity Employee (RAE), and FERS-Further Revised Annuity (FRAE)
Groups
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FERS-RAE FERS-FRAE
Group FERS Normal normal cost normal cost
cost (percent) (percent) (percent)
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Members......................................................... 23.5 17.3 17.5
Congressional employees, including members of the Capitol Police 25.2 19.4 19.6
Law enforcement officers, members of the Supreme Court Police, 34.7 35.2 35.4
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......................................... 34.5 35.0 35.1
Military reserve technicians.................................... 19.5 19.9 20.2
Employees under section 303 of the Central Intelligence Agency 23.8 24.4 24.6
Retirement Act of 1964 for certain employees (when serving
abroad)........................................................
Other employees of the United States Postal Service............. 15.5 15.9 16.1
All other regular FERS employees................................ 16.8 17.3 17.5
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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, 2019.
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.
Alexys Stanley,
Regulatory Affairs Analyst.
[FR Doc. 2019-10292 Filed 5-17-19; 8:45 am]
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