[Federal Register Volume 88, Number 72 (Friday, April 14, 2023)]
[Notices]
[Pages 23108-23109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07876]


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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, 
2023. Agency appeals of the normal cost percentages must be filed no 
later than October 16, 2023.

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, or by email to [email protected].

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 May 10, 2022, the Board of Actuaries of the Civil 
Service Retirement System (the Board) recommended revisions to the 
demographic assumptions used in the actuarial valuations of CSRS and 
FERS. The demographic assumptions include assumed rates of future 
mortality, employee withdrawal, retirement, and merit and longevity pay 
increases. The Board reviewed the long-term economic assumptions and 
determined that they should remain unchanged. OPM has adopted the 
Board's recommendations.

[[Page 23109]]

    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 the long-term economic 
assumptions should remain unchanged from what was determined at the 
Board's meeting on April 2, 2020. The long-term economic assumptions 
continue to be a rate of investment return of 4.0 percent; assumed 
inflation rate of 2.40 percent; the assumed rate of FERS annuitant Cost 
of Living Adjustments should remain at 80 percent of the assumed rate 
of inflation; and the projected rate of General Schedule salary 
increases should remain at 2.65 percent. The general salary increases 
are in addition to assumed merit salary 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 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-FRAE
                              Group                                 FERS normal      FERS-RAE       normal cost
                                                                  cost (percent)    normal cost      (percent)
-------------------------------------------------------------------------------------(percent)------------------
Members.........................................................            26.3            19.6            19.9
Capitol Police covered under 5 U.S.C. 8412(d) and 5 U.S.C.                  39.5            40.0            40.2
 8425(c)........................................................
Other Congressional employees...................................            27.0            19.6            19.9
Law enforcement officers, members of the Supreme Court Police,              39.5            40.0            40.2
 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.........................................            40.4            40.9            41.2
Military reserve technicians....................................            21.4            21.8            22.1
Employees under section 303 of the Central Intelligence Agency              27.0            27.5            27.8
 Retirement Act of 1964 for certain employees (when serving
 abroad)........................................................
Other employees of the United States Postal Service.............            16.9            17.3            17.6
All other regular FERS employees................................            19.2            19.6            19.9
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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, 2023.
    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.
Stephen Hickman,
Federal Register Liaison.
[FR Doc. 2023-07876 Filed 4-13-23; 8:45 am]
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