Federal Employees' Retirement System; Government Costs, 49277-49282 [2017-23141]
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49277
Rules and Regulations
Federal Register
Vol. 82, No. 205
Wednesday, October 25, 2017
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
OFFICE OF PERSONNEL
MANAGEMENT
5 CFR Parts 831, 839, 841, 842, and 847
RIN 3206–AN22
Federal Employees’ Retirement
System; Government Costs
Office of Personnel
Management.
ACTION: Final rule.
AGENCY:
The Office of Personnel
Management amends this rule to clarify
the manner OPM uses for determining a
supplemental liability under the Federal
Employees’ Retirement System (FERS),
and to clarify the process by which the
U.S. Postal Service (USPS) and the U.S.
Department of the Treasury (Treasury)
may request reconsideration of OPM’s
valuation of the supplemental liability.
The rule also clarifies the employee
categories OPM uses to compute the
FERS normal cost percentages. The rule
also amends the definitions of actuary,
present value factor, and actuarial
present value to ensure these definitions
are uniform and appropriate.
DATES: This rule is effective October 25,
2017.
FOR FURTHER INFORMATION CONTACT:
Roxann Johnson, (202) 606–0299 or
combox@opm.gov.
SUPPLEMENTARY INFORMATION: OPM’s
determination of the FERS normal cost
percentage necessary to fund the Civil
Service Retirement and Disability Fund
(CSRDF) is subject to appeal by agencies
with at least 1,000 employees in the
general category of employees or 500
employees in any of the special
categories of employees. The Secretary
of the Treasury or the Postmaster
General may request the Board of
Actuaries of the Civil Service
Retirement System (the Board) to
reconsider the amount determined to be
payable with respect to any
supplemental liability in accordance
with 5 U.S.C. 8423(c) and 5 CFR
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SUMMARY:
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841.409. The regulations at 5 CFR
841.401 through 5 CFR 841.411
establish the time limits and
requirements for an agency appeal of
OPM’s determination of a normal cost
percentage. OPM has added regulations
under 5 CFR part 841 to clarify the
process by which the Secretary of the
Treasury and the Postmaster General
may file a request for the Board to
reconsider an amount determined to be
payable to the CSRDF with respect to a
supplemental liability.
OPM’s final rule amends its definition
of ‘‘actuary’’ provided under 5 CFR
841.402. The prior definition was
limited to ‘‘an associate or fellow in the
Society of Actuaries and one who is
enrolled under section 3042 of Public
Law 93–406, the Employee Retirement
Income Security Act of 1974’’ (ERISA).
Because this definition no longer
reflected professional standards
generally required of an actuary for this
subpart, and was overly narrow because
it worked to exclude knowledgeable and
experienced actuaries who may not be
enrolled under ERISA but who are well
qualified to issue statements of opinion
with regard to the CSRDF, OPM has
amended the definition of ‘‘actuary’’ to
include those who meet the
qualification standards to issue a
statement of actuarial opinion in regard
to defined benefit retirement plans in
the United States.
OPM’s final rule amends its
regulations under 5 CFR 841.403 to
make clear that it determines separate
normal cost percentages for employees
covered under Federal Employees
Retirement System (FERS), FERS
Revised Annuity Employees (FERS–
RAE), and FERS Further Revised
Annuity Employees (FERS–FRAE) in
compliance with section 5001 of the
‘‘Middle Class Tax Relief and Job
Creation Act of 2012,’’ Public Law 112–
96, 126 Stat. 199 (Feb. 22, 2012), and
section 401 of the ‘‘Bipartisan Budget
Act of 2013,’’ Public Law 113–67, 127
Stat. 1165 (Dec. 26, 2013). This
legislation defined FERS–RAE and
FERS–FRAE employees for whom
increased retirement deductions apply,
which results in increased outlays from
the CSRDF in refund and lump-sum
payments of employee contributions.
For that reason, the normal cost
percentages for FERS–RAE and FERS–
FRAE employees are expected to exceed
the normal cost percentages for other
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FERS employees. The legislation also
reduced the benefit accrual rates for
Members and Congressional employees
(other than Capitol Police) subject to
FERS–RAE and FERS–FRAE, resulting
in lower associated normal cost
percentages. To ensure regulations
reflect current statutory language, OPM
has amended 5 CFR 841.403 to clearly
establish separate normal cost
percentages for FERS, FERS–RAE and
FERS–FRAE employees within each
employee category listed under 5 CFR
841.403.
OPM’s final rule amends 5 CFR
841.403 to make clear that it will
include members of the Capitol Police
as ‘‘Congressional Employees’’ for
purposes of deriving separate normal
cost percentages for this employee
group. OPM includes members of the
Capitol Police with Congressional
employees when deriving the normal
cost percentages for this employee
group because, in part, 5 U.S.C. 2107(4)
defines ‘‘a member or employee of the
Capitol Police’’ as ‘‘a Congressional
employee.’’ The Middle Class Tax Relief
and Job Creation Act of 2014 eliminated
for FERS–RAE and FERS–FRAE
employees the higher annuity accrual
rates for Congressional employees
provided under 5 U.S.C. 8415(c) (see 5
U.S.C. 8415(d)) but did not eliminate
the higher annuity accrual rates under 5
U.S.C. 8415(e) for members of the
Capitol Police subject to FERS–RAE and
FERS–FRAE. The annuity benefits of
members of the Capitol Police are more
closely comparable to another of the
special employee groups—law
enforcement officers, whose annuities
are computed under 5 U.S.C. 8415(e)—
for the purpose of determining their
FERS normal cost percentage. However,
because a member of the Capitol Police
is not within the FERS definition of
‘‘law enforcement officer’’ under 5
U.S.C. 8401(17), members of the Capitol
Police are not included in the special
category of ‘‘law enforcement officers’’
under 5 U.S.C. 8423(a)(1)(B) and,
therefore, are not subject to the normal
cost percentage applicable to that group.
The only special category listed in 5
U.S.C. 8423(a)(1)(B) that does apply to
members of the Capitol Police is
‘‘Congressional employees.’’ Thus,
despite the fact that the other
Congressional employees subject to
FERS–RAE and FERS–FRAE do not
receive enhanced annuity accrual rates,
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OPM must include Capitol Police in the
Congressional employee normal cost
percentage calculation under 5 U.S.C.
8423(a)(1)(B). Therefore, OPM’s final
rule amends 5 CFR 841.403(b) to reflect
all Congressional employees including
members of the Capitol Police in
determining the FERS, FERS–RAE and
FERS–FRAE normal cost percentages for
the ‘‘Congressional Employees’’
category.
OPM’s final rule amends 5 CFR
841.403 to include U.S. Postal Service
employees as a separate category for
which OPM will derive normal cost
percentages. OPM has determined a
Government-wide normal cost
percentage for each category of
employee, and U.S. Postal Service
employees have been included in the
category of either ‘‘all other employees’’
or ‘‘law enforcement officer’’ under 5
CFR 841.403(c) and (g). Because of the
separate U.S. Postal Service funding
provisions established under 5 U.S.C.
8423(b), and as a result of
recommendations from the Board,
OPM’s final rule amends its regulations
to provide for the use of U.S. Postal
Service-specific assumptions regarding
demographic factors in the calculation
of the U.S. Postal Service supplemental
liability and in the determination of the
normal cost percentage for U.S. Postal
Service employees who do not fall
under the category of ‘‘law enforcement
officer.’’ OPM’s final rule amends
regulations at 5 CFR 841.414, which
will provide specific guidance on the
calculation of the supplemental
liability; and OPM’s final rule adds
employees of the U.S. Postal Service,
who are not ‘‘law enforcement officers’’
under 5 CFR 841.403(c), as a separate
category for which OPM will derive
normal cost percentages under 5 CFR
841.403. OPM’s final rule removes
references to the term ‘‘Governmentwide normal cost percentage’’ from 5
CFR part 841 in order to conform with
the normal cost percentages established
for various categories of employees as
provided under this part, and to clarify
that an agency may appeal a published
normal cost percentage even if the
normal cost percentage applies to a
category of employee that exists
predominately or exclusively within a
single agency.
OPM’s final rule also adds 5 CFR
841.415 through 841.417 to the
regulations. These sections establish the
procedures and requirements for filing a
request for reconsideration of a
supplemental liability determination
filed by the Secretary of the Treasury or
the Postmaster General. Under 5 CFR
841.417, and consistent with
recommendations from the Board,
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OPM’s final rule requires that the
actuarial analysis submitted with the
request for reconsideration must
demonstrate a difference in the
supplemental liability of at least 2
percent of the present value of future
benefits calculated in OPM’s
computation of the supplemental
liability.
Additionally, OPM’s final rule refines
the definitions of present value factor
and actuarial present value under 5 CFR
parts 831, 839, 842, and 847 to ensure
that these definitions are uniform and
appropriate. OPM’s final rule clarifies,
under 5 CFR 831.303, 831.603,
831.2202, 839.102, 842.602, 842.702,
and 847.103, that the present value
factors are computed by using a
composite of sex-distinct factors based
upon mortality assumptions for
annuitant populations. The factors
reflect an increase in benefit payments
at an assumed rate of cost-of living
adjustment, where appropriate. OPM
removed 5 CFR 847.602, which
provided a separate description of
present value factors for purposes of
subpart F of part 847 in order to include
a definition of ‘‘present value factor’’ for
all of part 847, and OPM added 5 CFR
842.616 to describe when the present
value factors will be published. OPM’s
final rule clarifies under 5 CFR 842.602
and 842.702 that separate present value
factors apply to FERS annuities that
receive cost-of-living adjustments before
the retiree attains age 62 versus
annuities that do not receive cost-ofliving adjustments before age 62.
Comments
OPM received comments on its
proposed rule from the U.S. Postal
Service Office of Inspector General
(OIG) and the U.S. Postal Service
General Counsel’s Office (OGC). The
U.S. Postal Service OIG indicated that it
‘‘support[ed] the Proposed Rule as far as
it goes,’’ and the U.S. Postal Service
OGC indicated that OPM’s proposed
changes were a ‘‘welcomed step,’’ but
both organizations recommended that
the rule require not only the use of U.S.
Postal Service-specific demographic
factors but also the use of U.S. Postal
Service-specific economic factors
related to general salary growth
assumptions in determining the normal
costs and the supplemental liability.
OPM has determined that this change
is unnecessary. Currently, the
regulations under 5 CFR 841.405
provide that the normal cost percentages
will be based on the economic
assumptions determined by the Board,
and OPM’s final rule amends 5 CFR
841.414 to provide that each
supplemental liability will be computed
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based on the economic assumptions
determined by the Board for the most
recent valuation of FERS. Therefore,
nothing in the regulations would
prevent the Board from using general
salary growth and wage assumptions
specific to U.S. Postal Service
employees when, in the Board’s
judgment, doing so would be
appropriate.
OPM disagrees with the U.S. Postal
Service OGC’s assertion that 5 U.S.C.
8401(27)(A), 8423(b)(1), and
8348(h)(1)(A) require OPM to establish
regulations that direct the Board to
select general salary growth economic
assumptions specific to the U.S. Postal
Service for use in determining the
normal costs and supplemental
liabilities. The provisions under 5
U.S.C. 8401(23), 8401(27)(B)(iv), and
8348(h)(1)(A) require OPM to determine
the normal costs and supplemental
liabilities by applying ‘‘generally
accepted actuarial principles,’’ and 5
U.S.C. 8347(f) and 8423(a)(5) require the
Board to ‘‘furnish its advice and opinion
on matters referred to it by the Office’’
and to make recommendations that ‘‘in
the Board’s judgment are necessary to
protect the public interest and maintain
the System on a sound financial basis.’’
The selection of economic assumptions
used to determine the normal costs or
the supplemental liability is inherently
actuarial in nature. OPM finds that
requiring the use of general salary
growth economic assumptions specific
to the U.S. Postal Service for use in
determining the normal costs and
supplemental liabilities would
unnecessarily limit the Board’s
discretion in making these
determinations. As a result, OPM
declines to adopt the U.S. Postal Service
OGC’s recommendation to require the
Board to select U.S. Postal Servicespecific economic assumptions for use
in determining the normal costs and the
supplemental liability. To the extent the
U.S. Postal Service would like to submit
for the Board’s consideration any
information regarding the actuarial
merits of selecting U.S. Postal Servicespecific economic assumptions for use
in determining the normal cost and the
supplement liability, it may do so in
accordance with the requirements of
Board meeting notices.
The U.S. Postal Service OGC also
requested that OPM make clear in its
final rule that, in instances where OPM
has computed a separate normal cost
percentage, an agency’s right to appeal
and submit the evidence necessary to
support the appeal should be related to
OPM’s determination of that normal
cost percentage rather than any
Government-wide normal cost
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percentage. OPM agrees, and has
adopted the Postal Service OGC’s
recommendation by amending 5 CFR
841.406, 841.409, 841.410, 841.411, and
841.412, to make clear the requirements
for appealing a normal cost percentage
apply for each category where OPM
computes a normal cost percentage as
specified under 5 CFR 841.403.
Finally, the U.S. Postal Service OGC
requested that OPM not impose the 2
percent threshold requirement
necessary for the Board to sustain a
request for reconsideration of its
supplemental liability determinations.
The amended regulations under 5 CFR
841.147 provide that the Board cannot
sustain a request for reconsideration
unless the difference in the
supplemental liability amount is at least
2 percent of the present value of future
benefits calculated in OPM’s
computation of the supplemental
liability. OPM included this threshold
requirement as a result of a
recommendation from the Board
advising OPM that any threshold be set
as a difference in present value of future
benefits. OPM’s actuaries tested the
effect of what might be considered
substantive changes in the demographic
assumptions and produced results
within a range of 0 percent to a decrease
of 5.9 percent. Therefore, OPM has
determined that the 2 percent threshold
provided is a reasonable basis for
sustaining a request for reconsideration,
and therefore, OPM declines to adopt
the U.S. Postal Service OGC’s
recommendation to eliminate this
threshold.
Executive Order 12866, Regulatory
Review
This rule has been reviewed by the
Office of Management and Budget in
accordance with Executive Order (E.O.)
12866, as amended by E.O. 13258 and
E.O. 13422.
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Regulatory Flexibility Act
I certify that this regulation will not
have a significant economic impact on
a substantial number of small entities.
Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
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flexibility. This is not a significant
regulatory action and, therefore, was not
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
List of Subjects
5 CFR Part 831
Firefighters, Government employees,
Income taxes, Intergovernmental
relations, Law enforcement officers,
Pensions, Reporting and recordkeeping
requirements, Retirement.
5 CFR Part 839
Administrative practice and
procedure, Claims, Employment taxes,
Government employees, Pensions,
Reporting and recordkeeping
requirements, Retirement, Social
Security.
5 CFR Part 841
Administrative practice and
procedure, Air traffic controllers,
Claims, Disability benefits, Firefighters,
Government employees, Income taxes,
Intergovernmental relations, Law
enforcement officers, Pensions,
Retirement.
5 CFR Part 842
Air traffic controllers, Alimony,
Firefighters, Law enforcement officers,
Pensions, Retirement.
5 CFR Part 847
Administrative practice and
procedure, Disability benefits,
Government employees, Pensions,
Reporting and recordkeeping
requirements, Retirement.
U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.
For the reasons stated in the
preamble, the Office of Personnel
Management amends 5 CFR parts 831,
839, 841, 842, and 847 as set forth
below:
1. The authority citation for part 831
continues to read as follows:
■
Authority: 5 U.S.C. 8347; Sec. 831.102 also
issued under 5 U.S.C. 8334; Sec. 831.106 also
issued under 5 U.S.C. 552a; Sec. 831.108 also
issued under 5 U.S.C. 8336(d)(2); Sec.
831.114 also issued under 5 U.S.C.
8336(d)(2), and Sec. 1313(b)(5) of Pub. L.
107–296, 116 Stat. 2135; Sec. 831.201(b)(1)
also issued under 5 U.S.C. 8347(g); Sec.
831.201(b)(6) also issued under 5 U.S.C.
7701(b)(2); Sec. 831.201(g) also issued under
Secs. 11202(f), 11232(e), and 11246(b) of Pub.
L. 105–33, 111 Stat. 251; Sec. 831.201(g) also
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issued under Sec. 7(b) and (e) of Pub. L. 105–
274, 112 Stat. 2419; Sec. 831.201(i) also
issued under Secs. 3 and 7(c) of Pub. L. 105–
274, 112 Stat. 2419; Sec. 831.204 also issued
under Sec. 102(e) of Pub. L. 104–8, 109 Stat.
102, as amended by Sec. 153 of Pub. L. 104–
134, 110 Stat. 1321; Sec. 831.205 also issued
under Sec. 2207 of Pub. L. 106–265, 114 Stat.
784; Sec. 831.206 also issued under Sec.
1622(b) of Pub. L. 104–106, 110 Stat. 515;
Sec. 831.301 also issued under Sec. 2203 of
Pub. L. 106–265, 114 Stat. 780; Sec. 831.303
also issued under 5 U.S.C. 8334(d)(2) and
Sec. 2203 of Pub. L. 106–235, 114 Stat. 780;
Sec. 831.502 also issued under 5 U.S.C. 8337,
and Sec. 1(3), E.O. 11228, 3 CFR 1965–1965
Comp. p. 317; Sec. 831.663 also issued under
5 U.S.C. 8339(j) and (k)(2); Secs. 831.663 and
831.664 also issued under Sec. 11004(c)(2) of
Pub. L. 103–66, 107 Stat. 412; Sec. 831.682
also issued under Sec. 201(d) of Pub. L. 99–
251, 100 Stat. 23; Sec. 831.912 also issued
under Sec. 636 of Appendix C to Pub. L. 106–
554, 114 Stat. 2763A–164; Subpart P also
issued under Sec. 535(d) of Title V of
Division E of Pub. L. 110–161, 121 Stat. 2042;
Subpart V also issued under 5 U.S.C. 8343a
and Sec. 6001 of Pub. L. 100–203, 101 Stat.
1330–275; Sec. 831.2203 also issued under
Sec. 7001(a)(4) of Pub. L. 101–508, 104 Stat.
1388–328.
Subpart A—Administration and
General Provisions
2. Add § 831.117 to subpart A to read
as follows:
■
§ 831.117 Computation of the
supplemental liability.
(a) OPM will compute each
supplemental liability of the Fund using
demographic factors specific to the
populations for which the supplemental
liability applies.
(b) The supplemental liability will be
computed based on the economic
assumptions used by the Board of
Actuaries of the Civil Service
Retirement System for the most recent
valuation of the System.
(c) Each supplemental liability shall
be rounded to the nearest one hundred
million dollars.
Subpart C—Credit for Service
3. Amend § 831.303 by revising
paragraphs (c)(3) and (d)(3) to read as
follows:
■
PART 831—RETIREMENT
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§ 831.303
Civilian service.
*
*
*
*
*
(c) * * *
(3) For the purpose of paragraph (b)(2)
of this section, the term ‘‘present value
factor’’ has the same meaning as defined
in § 831.603 and ‘‘time of retirement’’
has the same meaning as defined in
§ 831.2202.
(d) * * *
(3) For the purpose of paragraph (d)(2)
of this section, the term ‘‘present value
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factor’’ has the same meaning as defined
in § 831.603 and ‘‘time of retirement’’
has the same meaning as defined in
§ 831.2202.
Present value factor has the same
meaning in this subpart as defined in
§ 831.603.
*
*
*
*
*
Subpart F—Survivor Annuities
PART 841—FEDERAL EMPLOYEES
RETIREMENT SYSTEM—GENERAL
ADMINSTRATION
4. Amend § 831.603 by revising the
definition of ‘‘present value factor’’ to
read as follows:
■
§ 831.603
8. The authority citation for part 841
continues to read as follows:
■
Definitions.
*
*
*
*
*
Present value factor means the
amount of money (earning interest at an
assumed rate) required at the time of
annuity commencement to fund an
annuity that starts at the rate of $1 a
month and is payable in monthly
installments for the annuitant’s lifetime
based on mortality rates for annuitants
paid from the Civil Service Retirement
and Disability Fund; and increases each
year at an assumed rate of cost of living
adjustment. Assumed rates of interest,
mortality, and cost-of-living adjustments
used in computing the present value are
those used by the Board of Actuaries of
the Civil Service Retirement System for
valuation of the System based on
dynamic assumptions. The present
value factors are unisex factors obtained
as a composite of sex-distinct present
value factors.
*
*
*
*
*
Subpart V—Alternative Forms of
Annuities
5. Amend § 831.2202 by revising the
definition of ‘‘present value factor’’ to
read as follows:
■
§ 831.2202
Definitions.
PART 839—CORRECTION OF
RETIREMENT COVERAGE ERRORS
UNDER THE FEDERAL ERRONEOUS
RETIREMENT COVERAGE
CORRECTIONS ACT
6. The authority citation for part 839
continues to read as follows:
■
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Authority: Title II, Pub. L. 106–265, 114
Stat. 770.
Subpart A—General Provisions
7. Amend § 839.102 by revising the
definition of ‘‘present value factor’’ to
read as follows:
■
*
Definitions.
*
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*
9. Amend § 841.401 by revising
paragraphs (b)(3) and (4) and adding
paragraph (b)(5) to read as follows:
■
§ 841.401
Purpose and scope.
*
*
*
*
*
(b) * * *
(3) Agency appeals of rate
determinations;
(4) Methodology for determining the
amount due from each agency; and
(5) Requests for reconsideration of the
supplemental liability.
■ 10. Amend § 841.402 by revising the
definition of ‘‘actuary’’ to read as
follows:
Definitions.
*
*
*
*
*
Present value factor has the same
meaning in this subpart as defined in
§ 831.603.
*
*
*
*
*
*
Subpart D—Government Costs
§ 841.402
*
§ 839.102
Authority: 5 U.S.C. 8461; Sec. 841.108 also
issued under 5 U.S.C. 552a; Secs. 841.110
and 841.111 also issued under 5 U.S.C.
8470(a); subpart D also issued under 5 U.S.C.
8423; Sec. 841.504 also issued under 5 U.S.C.
8422; Sec. 841.507 also issued under section
505 of Pub. L. 99–335; subpart J also issued
under 5 U.S.C. 8469; Sec. 841.506 also issued
under 5 U.S.C. 7701(b)(2); Sec. 841.508 also
issued under section 505 of Pub. L. 99–335;
Sec. 841.604 also issued under Title II, Pub.
L. 106–265, 114 Stat. 780.
*
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*
*
*
*
Actuary means a professional who
meets the qualification standards to
issue a statement of actuarial opinion in
regard to defined benefit retirement
plans in the United States.
*
*
*
*
*
■ 11. Amend § 841.403 by revising the
introductory text, paragraph (b),
paragraph (g), and adding paragraph (h)
to read as follows:
§ 841.403 Categories of employees for
computation of normal cost percentages.
Separate normal cost percentages for
FERS, FERS–RAE and FERS–FRAE will
be determined for each of the following
groups of employees:
*
*
*
*
*
(b) Congressional employees,
including members of the Capitol
Police;
*
*
*
*
*
(g) Other employees of the United
States Postal Service;
(h) All other employees.
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12. Revise § 841.406(a) to read as
follows:
■
§ 841.406 Determination of normal cost
percentages.
(a) OPM will determine the normal
cost percentages for each category of
employees. These normal cost
percentages will be used by all agencies
that have not been granted a single
agency rate under § 841.412.
*
*
*
*
*
■ 13. Revise § 841.407(b)(1) to read as
follows:
§ 841.407 Notice of normal cost
percentage determinations.
*
*
*
*
*
(b) * * *
(1) The normal cost percentages and
any single agency rates for each category
of employees;
*
*
*
*
*
■ 14. Revise § 841.409 to read as
follows:
§ 841.409 Agency right to appeal normal
cost percentage.
(a) An agency with at least 1,000
employees in the general category of
employees or 500 employees in any of
the special categories may appeal to the
Board the normal cost percentage for
that category as applied to that agency.
(b) No appeal will be considered by
the Board unless the agency files, no
later than 6 months after the date of
publication of the notice of normal cost
percentages under § 841.407, a petition
for appeal that meets all the
requirements of § 841.410.
■ 15. Amend § 841.410 by revising the
section heading and revising the
introductory text of paragraph (c) and
revising paragraph (c)(3) to read as
follows:
§ 841.410 Contents of petition for appeal
of normal cost percentage.
*
*
*
*
*
(c) The actuarial report must contain
a detailed actuarial analysis of the
normal cost of FERS benefits as applied
to the employees of that agency in the
category of employees for which the
agency is appealing. The actuarial report
must—
*
*
*
*
*
(3) Specifically address and consider
each of the demographic factors listed in
§ 841.404. The appealing agency is
responsible for developing data relating
to the first nine demographic factors as
they relate to the category of agency
employees for which the appeal is being
filed. OPM’s demographic factors
(available from OPM) will be presumed
to be sufficient and reliable for factors
10 through 13 unless the appealing
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agency is able to demonstrate, through
sufficient and reliable data relating to its
employees or former employees, the use
of alternative factors is appropriate. The
fourteenth factor, administrative
expenses, will be supplied by OPM.
*
*
*
*
*
■ 16. Amend § 841.411 by revising the
section heading and revising paragraph
(a), (b), and (d)(3) and (4) to read as
follows:
§ 841.411 Appeals procedure for normal
cost percentage.
(a) The normal cost percentages as
published under § 841.407 are
presumed to apply to all agencies. Any
agency appealing application of a
published normal cost percentage to any
category of employees in its workforce
must demonstrate to the satisfaction of
the Board that the normal cost
percentage for that category of
employees in that agency is sufficiently
different from the published normal cost
percentage.
(b) While an agency has an appeal
pending, the published normal cost
percentage continues to apply to that
agency.
*
*
*
*
*
(d) * * *
(3) When all relevant factors are
considered together, there is a
demonstrated difference between the
published normal cost percentage being
appealed and the normal cost
percentage for the group at issue; and
(4) The difference is at least 10
percent of the published normal cost
percentage being appealed.
■ 17. Revise § 841.412(c) to read as
follows:
§ 841.412
Rates determined by appeal.
*
*
*
*
*
(c) A single agency rate may be higher
or lower than the published normal cost
percentage and will remain in force for
not less than 3 years.
*
*
*
*
*
■ 18. Add § 841.414 to subpart D to read
as follows:
nlaroche on DSK9F9SC42PROD with RULES
§ 841.414 Computation of the
supplemental liability.
(a) OPM will compute each
supplemental liability of the Civil
Service Retirement and Disability Fund
using demographic factors consistent
with those used for the computation of
the normal cost percentages under
§ 841.403.
(b) The supplemental liability will be
computed based on the economic
assumptions determined by the Board
for the most recent valuation of the
Federal Employees Retirement System.
VerDate Sep<11>2014
14:30 Oct 24, 2017
Jkt 244001
(c) Each supplemental liability will be
rounded to the nearest one hundred
million dollars.
■ 19. Add § 841.415 to subpart D to read
as follows:
§ 841.415 Right to request reconsideration
of the supplemental liability.
(a) The Secretary of the Treasury or
the Postmaster General may request the
Board to reconsider a determination of
the amount payable with respect to any
supplemental liability.
(b) No request for reconsideration will
be considered by the Board unless the
Secretary of the Treasury or the
Postmaster General files, no later than 6
months after the date of receipt of the
first notice of the amount payable with
respect to the supplemental liability, a
request for reconsideration that meets
all the requirements of § 841.416.
■ 20. Add § 841.416 to subpart D to read
as follows:
§ 841.416 Contents of a request for
reconsideration of the supplemental
liability.
(a) To request reconsideration of the
amount payable with respect to the
supplemental liability, the Secretary of
the Treasury or the Postmaster General
must file with OPM—
(1) A signed letter of appeal
summarizing the basis of the request;
and
(2) An actuarial report that contains a
detailed actuarial analysis of the
request.
(b) The actuarial report must—
(1) Be signed by an actuary;
(2) Specifically present any data and
development of assumptions related to
the request for reconsideration;
(3) Use each of the demographic
factors listed in § 841.404; and
(4) Use the economic assumptions
under § 841.414(b). When a request is
based in whole or in part on a pattern
of merit salary increases, the report may
include an analysis of the economic
assumptions concerning salary and
wage growth to take into account the
combined effect of merit and general
wage and salary growth.
■ 21. Add § 841.417 to subpart D to read
as follows:
§ 841.417 Reconsideration of the
supplemental liability.
(a) The Board cannot sustain a request
for reconsideration unless the Board
finds that—
(1) The data used in the actuarial
report required by § 841.416 are
sufficient and reliable;
(2) The assumptions used in the
actuarial report required by § 841.416
are justified; and
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Fmt 4700
Sfmt 4700
49281
(3) The difference in the supplemental
liability amount is at least 2 percent of
the present value of future benefits
calculated in OPM’s computation of the
supplemental liability.
(b) If the Board sustains a request for
reconsideration of the supplemental
liability, OPM will recompute the
supplemental liability according to the
economic and demographic
assumptions recommended by the
Board.
PART 842—FEDERAL EMPLOYEES
RETIREMENT SYSTEM—BASIC
ANNUITY
22. The authority citation for part 842
continues to read as follows:
■
Authority: 5 U.S.C. 8461(g); Secs. 842.104
and 842.106 also issued under 5 U.S.C.
8461(n); Sec. 842.104 also issued under Secs.
3 and 7(c) of Pub. L. 105–274, 112 Stat. 2419;
Sec. 842.105 also issued under 5 U.S.C.
8402(c)(1) and 7701(b)(2); Sec. 842.106 also
issued under Sec. 102(e) of Pub. L. 104–8,
109 Stat. 102, as amended by Sec. 153 of Pub.
L. 104–134, 110 Stat. 1321–102; Sec. 842.107
also issued under Secs. 11202(f), 11232(e),
and 11246(b) of Pub. L. 105–33, 111 Stat.
251, and Sec. 7(b) of Pub. L. 105–274, 112
Stat. 2419; Sec. 842.108 also issued under
Sec. 7(e) of Pub. L. 105–274, 112 Stat. 2419;
Sec. 842.109 also issued under Sec. 1622(b)
of Public Law 104–106, 110 Stat. 515; Sec.
842.208 also issued under Sec. 535(d) of Title
V of Division E of Pub. L. 110–161, 121 Stat.
2042; Sec. 842.213 also issued under 5 U.S.C.
8414(b)(1)(B) and Sec. 1313(b)(5) of Pub. L.
107–296, 116 Stat. 2135; Secs. 842.304 and
842.305 also issued under Sec. 321(f) of Pub.
L. 107–228, 116 Stat. 1383, Secs. 842.604 and
842.611 also issued under 5 U.S.C. 8417; Sec.
842.607 also issued under 5 U.S.C. 8416 and
8417; Sec. 842.614 also issued under 5 U.S.C.
8419; Sec. 842.615 also issued under 5 U.S.C.
8418; Sec. 842.703 also issued under Sec.
7001(a)(4) of Pub. L. 101–508, 104 Stat. 1388;
Sec. 842.707 also issued under Sec. 6001 of
Pub. L. 100–203, 101 Stat. 1300; Sec. 842.708
also issued under Sec. 4005 of Pub. L. 101–
239, 103 Stat. 2106 and Sec. 7001 of Pub. L.
101–508, 104 Stat. 1388; Subpart H also
issued under 5 U.S.C. 1104; Sec. 842.810 also
issued under Sec. 636 of Appendix C to Pub.
L. 106–554 at 114 Stat. 2763A–164; Sec.
842.811 also issued under Sec. 226(c)(2) of
Public Law 108–176, 117 Stat. 2529; Subpart
J also issued under Sec. 535(d) of Title V of
Division E of Pub. L. 110–161, 121 Stat. 2042.
Subpart F—Survivor Elections
23. Amend § 842.602 by revising the
definition of ‘‘present value factor’’ to
read as follows:
■
§ 842.602
Definitions.
*
*
*
*
*
Present value factor means the
amount of money (earning interest at an
assumed rate) required at the time of
annuity commencement to fund an
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annuity that starts at the rate of $1 a
month and is payable in monthly
installments for the annuitant’s lifetime
based on mortality rates for annuitants
paid from the Civil Service Retirement
and Disability Fund; and increases each
year at an assumed rate of cost-of-living
adjustment. Assumed rates of interest,
mortality, and cost-of-living adjustments
used in computing the present value are
those used by the Board of Actuaries of
the Civil Service Retirement System for
valuation of the Federal Employees’
Retirement System based on dynamic
assumptions. The present value factors
are unisex factors obtained as a
composite of sex-distinct present value
factors. Separate present value factors
apply for FERS annuities that receive
cost-of-living adjustments before the
retiree attains age 62, versus FERS
annuities that do not receive cost-ofliving adjustments before the retiree
attains age 62.
*
*
*
*
*
■ 24. Add § 842.616 to subpart F to read
as follows:
§ 842.616
factors.
Subpart G—Alternative Forms of
Annuities
Definitions.
PART 847—ELECTIONS OF
RETIREMENT COVERAGE BY
CURRENT AND FORMER EMPLOYEES
OF NONAPPROPRIATED FUND
INSTRUMENTALITIES
26. The authority citation for part 847
continues to read as follows:
nlaroche on DSK9F9SC42PROD with RULES
■
Authority: 5 U.S.C. 8332(b)(17) and
8411(b)(6) and sections 1131 and 1132 of
Pub. L. 107–107, December 28, 2001, 115 Stat
1242; 5 U.S.C. 8347(a) and 8461(g) and
section 1043(b) of Pub. L. 104–106, Div. A,
Title X, Feb. 10, 1996, 110 Stat. 434. Subpart
B also issued under 5 U.S.C. 8347(q) and
8461(n).
Subpart F—Additional Employee Costs
Under the Retroactive Provisions
§ 847.602
■
[Removed and Reserved]
28. Remove and reserve § 847.602.
[FR Doc. 2017–23141 Filed 10–24–17; 8:45 am]
BILLING CODE 6325–38–P
DEPARTMENT OF AGRICULTURE
7 CFR Part 3560
RIN 0575–AC98
Multi-Family Housing Program
Requirements To Reduce Financial
Reporting Requirements
Rural Housing Service, USDA.
Final rule.
The Rural Housing Service
(RHS) is revising its existing regulations
regarding financial reporting. This
action is necessary to align RHS
requirements with those of the United
States Department of Housing and
Urban Development (HUD) utilizing a
risk-based threshold reporting which
will reduce the burden on the borrower
to produce multiple financial reports;
focus on high-risk properties; and,
reduce the financial cost of reporting on
properties.
DATES: This rule is effective November
24, 2017.
FOR FURTHER INFORMATION CONTACT:
Janet Stouder, Deputy Director, MultiFamily Housing Portfolio Management
Division, Rural Housing Service, Room
1237S—STOP 0782, 1400 Independence
Avenue SW., Washington, DC 20250–
0782, Telephone: (202) 720–9728.
SUPPLEMENTARY INFORMATION:
Executive Order 12866, Classification
Subpart A—General Provisions
27. Amend § 847.103(b) to revise the
definition of ‘‘actuarial present value’’
Jkt 244001
*
*
*
*
(b) * * *
Actuarial present value means the
amount of monthly annuity at time of
retirement multiplied by the applicable
present value factor.
* * *
Present value factor has the same
meaning in this part as defined in
§ 842.602.
*
*
*
*
*
SUMMARY:
*
*
*
*
Present value factor has the same
meaning in this subpart as defined in
§ 842.602.
*
*
*
*
*
14:30 Oct 24, 2017
*
ACTION:
*
VerDate Sep<11>2014
Definitions.
AGENCY:
25. Amend § 842.702 by revising the
definition of ‘‘present value factor’’ to
read as follows:
■
■
§ 847.103
Rural Housing Service
Publication of present value
When OPM publishes in the Federal
Register notice of normal cost
percentages under § 841.407, it will also
publish updated present value factors.
§ 842.702
and to add the definition of ‘‘present
value factor’’ in alphabetical order as
follows:
This final rule has been determined to
be non-significant and, therefore was
not reviewed by the Office of
PO 00000
Frm 00006
Fmt 4700
Sfmt 4700
Management and Budget (OMB) under
Executive Order 12866.
Authority
The Multi-Family Housing program
(MFH) is administered, subject to
appropriations, by the U.S. Department
of Agriculture (USDA) as authorized
under Sections 514, 515, 516 and 521 of
the Housing Act of 1949, as amended
(42 U.S.C. 1484, 1485, 1486, and 1490).
Environmental Impact Statement
This document has been reviewed in
accordance with 7 CFR part 1970,
‘‘Environmental Program.’’ RHS has
determined that this action does not
constitute a major Federal action
significantly affecting the quality of the
environment. In accordance with the
National Environmental Policy Act of
1969, Public Law 91–190, an
Environmental Impact Statement is not
required.
Regulatory Flexibility Act
This final rule has been reviewed
with regard to the requirements of the
Regulatory Flexibility Act (5 U.S.C.
601–612). The undersigned has
determined and certified by signature
on this document that this rule will not
have a significant economic impact on
a substantial number of small entities
since this rulemaking action does not
involve a new or expanded program nor
does it require any more action on the
part of a small business than required of
a large entity.
Executive Order 13132, Federalism
The policies contained in this rule do
not have any substantial direct effect on
States, on the relationship between the
National Government and the States, or
on the distribution of power and
responsibilities among the various
levels of Government. This rule does not
impose substantial direct compliance
costs on State and local Governments;
therefore, consultation with the States is
not required.
Executive Order 12988, Civil Justice
Reform
This rule has been reviewed under
Executive Order 12988. In accordance
with this rule: (1) Unless otherwise
specifically provided, all State and local
laws that are in conflict with this rule
will be preempted; (2) no retroactive
effect will be given to this rule except
as specifically prescribed in the rule;
and (3) administrative proceedings of
the National Appeals Division of the
Department of Agriculture (7 CFR part
11) must be exhausted before bringing
suit in court that challenges action taken
under this rule.
E:\FR\FM\25OCR1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 205 (Wednesday, October 25, 2017)]
[Rules and Regulations]
[Pages 49277-49282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-23141]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 82, No. 205 / Wednesday, October 25, 2017 /
Rules and Regulations
[[Page 49277]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 831, 839, 841, 842, and 847
RIN 3206-AN22
Federal Employees' Retirement System; Government Costs
AGENCY: Office of Personnel Management.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management amends this rule to clarify
the manner OPM uses for determining a supplemental liability under the
Federal Employees' Retirement System (FERS), and to clarify the process
by which the U.S. Postal Service (USPS) and the U.S. Department of the
Treasury (Treasury) may request reconsideration of OPM's valuation of
the supplemental liability. The rule also clarifies the employee
categories OPM uses to compute the FERS normal cost percentages. The
rule also amends the definitions of actuary, present value factor, and
actuarial present value to ensure these definitions are uniform and
appropriate.
DATES: This rule is effective October 25, 2017.
FOR FURTHER INFORMATION CONTACT: Roxann Johnson, (202) 606-0299 or
[email protected].
SUPPLEMENTARY INFORMATION: OPM's determination of the FERS normal cost
percentage necessary to fund the Civil Service Retirement and
Disability Fund (CSRDF) is subject to appeal by agencies with at least
1,000 employees in the general category of employees or 500 employees
in any of the special categories of employees. The Secretary of the
Treasury or the Postmaster General may request the Board of Actuaries
of the Civil Service Retirement System (the Board) to reconsider the
amount determined to be payable with respect to any supplemental
liability in accordance with 5 U.S.C. 8423(c) and 5 CFR 841.409. The
regulations at 5 CFR 841.401 through 5 CFR 841.411 establish the time
limits and requirements for an agency appeal of OPM's determination of
a normal cost percentage. OPM has added regulations under 5 CFR part
841 to clarify the process by which the Secretary of the Treasury and
the Postmaster General may file a request for the Board to reconsider
an amount determined to be payable to the CSRDF with respect to a
supplemental liability.
OPM's final rule amends its definition of ``actuary'' provided
under 5 CFR 841.402. The prior definition was limited to ``an associate
or fellow in the Society of Actuaries and one who is enrolled under
section 3042 of Public Law 93-406, the Employee Retirement Income
Security Act of 1974'' (ERISA). Because this definition no longer
reflected professional standards generally required of an actuary for
this subpart, and was overly narrow because it worked to exclude
knowledgeable and experienced actuaries who may not be enrolled under
ERISA but who are well qualified to issue statements of opinion with
regard to the CSRDF, OPM has amended the definition of ``actuary'' to
include those who meet the qualification standards to issue a statement
of actuarial opinion in regard to defined benefit retirement plans in
the United States.
OPM's final rule amends its regulations under 5 CFR 841.403 to make
clear that it determines separate normal cost percentages for employees
covered under Federal Employees Retirement System (FERS), FERS Revised
Annuity Employees (FERS-RAE), and FERS Further Revised Annuity
Employees (FERS-FRAE) in compliance with section 5001 of the ``Middle
Class Tax Relief and Job Creation Act of 2012,'' Public Law 112-96, 126
Stat. 199 (Feb. 22, 2012), and section 401 of the ``Bipartisan Budget
Act of 2013,'' Public Law 113-67, 127 Stat. 1165 (Dec. 26, 2013). This
legislation defined FERS-RAE and FERS-FRAE employees for whom increased
retirement deductions apply, which results in increased outlays from
the CSRDF in refund and lump-sum payments of employee contributions.
For that reason, the normal cost percentages for FERS-RAE and FERS-FRAE
employees are expected to exceed the normal cost percentages for other
FERS employees. The legislation also reduced the benefit accrual rates
for Members and Congressional employees (other than Capitol Police)
subject to FERS-RAE and FERS-FRAE, resulting in lower associated normal
cost percentages. To ensure regulations reflect current statutory
language, OPM has amended 5 CFR 841.403 to clearly establish separate
normal cost percentages for FERS, FERS-RAE and FERS-FRAE employees
within each employee category listed under 5 CFR 841.403.
OPM's final rule amends 5 CFR 841.403 to make clear that it will
include members of the Capitol Police as ``Congressional Employees''
for purposes of deriving separate normal cost percentages for this
employee group. OPM includes members of the Capitol Police with
Congressional employees when deriving the normal cost percentages for
this employee group because, in part, 5 U.S.C. 2107(4) defines ``a
member or employee of the Capitol Police'' as ``a Congressional
employee.'' The Middle Class Tax Relief and Job Creation Act of 2014
eliminated for FERS-RAE and FERS-FRAE employees the higher annuity
accrual rates for Congressional employees provided under 5 U.S.C.
8415(c) (see 5 U.S.C. 8415(d)) but did not eliminate the higher annuity
accrual rates under 5 U.S.C. 8415(e) for members of the Capitol Police
subject to FERS-RAE and FERS-FRAE. The annuity benefits of members of
the Capitol Police are more closely comparable to another of the
special employee groups--law enforcement officers, whose annuities are
computed under 5 U.S.C. 8415(e)--for the purpose of determining their
FERS normal cost percentage. However, because a member of the Capitol
Police is not within the FERS definition of ``law enforcement officer''
under 5 U.S.C. 8401(17), members of the Capitol Police are not included
in the special category of ``law enforcement officers'' under 5 U.S.C.
8423(a)(1)(B) and, therefore, are not subject to the normal cost
percentage applicable to that group. The only special category listed
in 5 U.S.C. 8423(a)(1)(B) that does apply to members of the Capitol
Police is ``Congressional employees.'' Thus, despite the fact that the
other Congressional employees subject to FERS-RAE and FERS-FRAE do not
receive enhanced annuity accrual rates,
[[Page 49278]]
OPM must include Capitol Police in the Congressional employee normal
cost percentage calculation under 5 U.S.C. 8423(a)(1)(B). Therefore,
OPM's final rule amends 5 CFR 841.403(b) to reflect all Congressional
employees including members of the Capitol Police in determining the
FERS, FERS-RAE and FERS-FRAE normal cost percentages for the
``Congressional Employees'' category.
OPM's final rule amends 5 CFR 841.403 to include U.S. Postal
Service employees as a separate category for which OPM will derive
normal cost percentages. OPM has determined a Government-wide normal
cost percentage for each category of employee, and U.S. Postal Service
employees have been included in the category of either ``all other
employees'' or ``law enforcement officer'' under 5 CFR 841.403(c) and
(g). Because of the separate U.S. Postal Service funding provisions
established under 5 U.S.C. 8423(b), and as a result of recommendations
from the Board, OPM's final rule amends its regulations to provide for
the use of U.S. Postal Service-specific assumptions regarding
demographic factors in the calculation of the U.S. Postal Service
supplemental liability and in the determination of the normal cost
percentage for U.S. Postal Service employees who do not fall under the
category of ``law enforcement officer.'' OPM's final rule amends
regulations at 5 CFR 841.414, which will provide specific guidance on
the calculation of the supplemental liability; and OPM's final rule
adds employees of the U.S. Postal Service, who are not ``law
enforcement officers'' under 5 CFR 841.403(c), as a separate category
for which OPM will derive normal cost percentages under 5 CFR 841.403.
OPM's final rule removes references to the term ``Government-wide
normal cost percentage'' from 5 CFR part 841 in order to conform with
the normal cost percentages established for various categories of
employees as provided under this part, and to clarify that an agency
may appeal a published normal cost percentage even if the normal cost
percentage applies to a category of employee that exists predominately
or exclusively within a single agency.
OPM's final rule also adds 5 CFR 841.415 through 841.417 to the
regulations. These sections establish the procedures and requirements
for filing a request for reconsideration of a supplemental liability
determination filed by the Secretary of the Treasury or the Postmaster
General. Under 5 CFR 841.417, and consistent with recommendations from
the Board, OPM's final rule requires that the actuarial analysis
submitted with the request for reconsideration must demonstrate a
difference in the supplemental liability of at least 2 percent of the
present value of future benefits calculated in OPM's computation of the
supplemental liability.
Additionally, OPM's final rule refines the definitions of present
value factor and actuarial present value under 5 CFR parts 831, 839,
842, and 847 to ensure that these definitions are uniform and
appropriate. OPM's final rule clarifies, under 5 CFR 831.303, 831.603,
831.2202, 839.102, 842.602, 842.702, and 847.103, that the present
value factors are computed by using a composite of sex-distinct factors
based upon mortality assumptions for annuitant populations. The factors
reflect an increase in benefit payments at an assumed rate of cost-of
living adjustment, where appropriate. OPM removed 5 CFR 847.602, which
provided a separate description of present value factors for purposes
of subpart F of part 847 in order to include a definition of ``present
value factor'' for all of part 847, and OPM added 5 CFR 842.616 to
describe when the present value factors will be published. OPM's final
rule clarifies under 5 CFR 842.602 and 842.702 that separate present
value factors apply to FERS annuities that receive cost-of-living
adjustments before the retiree attains age 62 versus annuities that do
not receive cost-of-living adjustments before age 62.
Comments
OPM received comments on its proposed rule from the U.S. Postal
Service Office of Inspector General (OIG) and the U.S. Postal Service
General Counsel's Office (OGC). The U.S. Postal Service OIG indicated
that it ``support[ed] the Proposed Rule as far as it goes,'' and the
U.S. Postal Service OGC indicated that OPM's proposed changes were a
``welcomed step,'' but both organizations recommended that the rule
require not only the use of U.S. Postal Service-specific demographic
factors but also the use of U.S. Postal Service-specific economic
factors related to general salary growth assumptions in determining the
normal costs and the supplemental liability.
OPM has determined that this change is unnecessary. Currently, the
regulations under 5 CFR 841.405 provide that the normal cost
percentages will be based on the economic assumptions determined by the
Board, and OPM's final rule amends 5 CFR 841.414 to provide that each
supplemental liability will be computed based on the economic
assumptions determined by the Board for the most recent valuation of
FERS. Therefore, nothing in the regulations would prevent the Board
from using general salary growth and wage assumptions specific to U.S.
Postal Service employees when, in the Board's judgment, doing so would
be appropriate.
OPM disagrees with the U.S. Postal Service OGC's assertion that 5
U.S.C. 8401(27)(A), 8423(b)(1), and 8348(h)(1)(A) require OPM to
establish regulations that direct the Board to select general salary
growth economic assumptions specific to the U.S. Postal Service for use
in determining the normal costs and supplemental liabilities. The
provisions under 5 U.S.C. 8401(23), 8401(27)(B)(iv), and 8348(h)(1)(A)
require OPM to determine the normal costs and supplemental liabilities
by applying ``generally accepted actuarial principles,'' and 5 U.S.C.
8347(f) and 8423(a)(5) require the Board to ``furnish its advice and
opinion on matters referred to it by the Office'' and to make
recommendations that ``in the Board's judgment are necessary to protect
the public interest and maintain the System on a sound financial
basis.'' The selection of economic assumptions used to determine the
normal costs or the supplemental liability is inherently actuarial in
nature. OPM finds that requiring the use of general salary growth
economic assumptions specific to the U.S. Postal Service for use in
determining the normal costs and supplemental liabilities would
unnecessarily limit the Board's discretion in making these
determinations. As a result, OPM declines to adopt the U.S. Postal
Service OGC's recommendation to require the Board to select U.S. Postal
Service-specific economic assumptions for use in determining the normal
costs and the supplemental liability. To the extent the U.S. Postal
Service would like to submit for the Board's consideration any
information regarding the actuarial merits of selecting U.S. Postal
Service-specific economic assumptions for use in determining the normal
cost and the supplement liability, it may do so in accordance with the
requirements of Board meeting notices.
The U.S. Postal Service OGC also requested that OPM make clear in
its final rule that, in instances where OPM has computed a separate
normal cost percentage, an agency's right to appeal and submit the
evidence necessary to support the appeal should be related to OPM's
determination of that normal cost percentage rather than any
Government-wide normal cost
[[Page 49279]]
percentage. OPM agrees, and has adopted the Postal Service OGC's
recommendation by amending 5 CFR 841.406, 841.409, 841.410, 841.411,
and 841.412, to make clear the requirements for appealing a normal cost
percentage apply for each category where OPM computes a normal cost
percentage as specified under 5 CFR 841.403.
Finally, the U.S. Postal Service OGC requested that OPM not impose
the 2 percent threshold requirement necessary for the Board to sustain
a request for reconsideration of its supplemental liability
determinations. The amended regulations under 5 CFR 841.147 provide
that the Board cannot sustain a request for reconsideration unless the
difference in the supplemental liability amount is at least 2 percent
of the present value of future benefits calculated in OPM's computation
of the supplemental liability. OPM included this threshold requirement
as a result of a recommendation from the Board advising OPM that any
threshold be set as a difference in present value of future benefits.
OPM's actuaries tested the effect of what might be considered
substantive changes in the demographic assumptions and produced results
within a range of 0 percent to a decrease of 5.9 percent. Therefore,
OPM has determined that the 2 percent threshold provided is a
reasonable basis for sustaining a request for reconsideration, and
therefore, OPM declines to adopt the U.S. Postal Service OGC's
recommendation to eliminate this threshold.
Executive Order 12866, Regulatory Review
This rule has been reviewed by the Office of Management and Budget
in accordance with Executive Order (E.O.) 12866, as amended by E.O.
13258 and E.O. 13422.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities.
Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, dated September 30, 1993. This rule is not a major rule
under 5 U.S.C. 804.
List of Subjects
5 CFR Part 831
Firefighters, Government employees, Income taxes, Intergovernmental
relations, Law enforcement officers, Pensions, Reporting and
recordkeeping requirements, Retirement.
5 CFR Part 839
Administrative practice and procedure, Claims, Employment taxes,
Government employees, Pensions, Reporting and recordkeeping
requirements, Retirement, Social Security.
5 CFR Part 841
Administrative practice and procedure, Air traffic controllers,
Claims, Disability benefits, Firefighters, Government employees, Income
taxes, Intergovernmental relations, Law enforcement officers, Pensions,
Retirement.
5 CFR Part 842
Air traffic controllers, Alimony, Firefighters, Law enforcement
officers, Pensions, Retirement.
5 CFR Part 847
Administrative practice and procedure, Disability benefits,
Government employees, Pensions, Reporting and recordkeeping
requirements, Retirement.
U.S. Office of Personnel Management.
Kathleen M. McGettigan,
Acting Director.
For the reasons stated in the preamble, the Office of Personnel
Management amends 5 CFR parts 831, 839, 841, 842, and 847 as set forth
below:
PART 831--RETIREMENT
0
1. The authority citation for part 831 continues to read as follows:
Authority: 5 U.S.C. 8347; Sec. 831.102 also issued under 5
U.S.C. 8334; Sec. 831.106 also issued under 5 U.S.C. 552a; Sec.
831.108 also issued under 5 U.S.C. 8336(d)(2); Sec. 831.114 also
issued under 5 U.S.C. 8336(d)(2), and Sec. 1313(b)(5) of Pub. L.
107-296, 116 Stat. 2135; Sec. 831.201(b)(1) also issued under 5
U.S.C. 8347(g); Sec. 831.201(b)(6) also issued under 5 U.S.C.
7701(b)(2); Sec. 831.201(g) also issued under Secs. 11202(f),
11232(e), and 11246(b) of Pub. L. 105-33, 111 Stat. 251; Sec.
831.201(g) also issued under Sec. 7(b) and (e) of Pub. L. 105-274,
112 Stat. 2419; Sec. 831.201(i) also issued under Secs. 3 and 7(c)
of Pub. L. 105-274, 112 Stat. 2419; Sec. 831.204 also issued under
Sec. 102(e) of Pub. L. 104-8, 109 Stat. 102, as amended by Sec. 153
of Pub. L. 104-134, 110 Stat. 1321; Sec. 831.205 also issued under
Sec. 2207 of Pub. L. 106-265, 114 Stat. 784; Sec. 831.206 also
issued under Sec. 1622(b) of Pub. L. 104-106, 110 Stat. 515; Sec.
831.301 also issued under Sec. 2203 of Pub. L. 106-265, 114 Stat.
780; Sec. 831.303 also issued under 5 U.S.C. 8334(d)(2) and Sec.
2203 of Pub. L. 106-235, 114 Stat. 780; Sec. 831.502 also issued
under 5 U.S.C. 8337, and Sec. 1(3), E.O. 11228, 3 CFR 1965-1965
Comp. p. 317; Sec. 831.663 also issued under 5 U.S.C. 8339(j) and
(k)(2); Secs. 831.663 and 831.664 also issued under Sec. 11004(c)(2)
of Pub. L. 103-66, 107 Stat. 412; Sec. 831.682 also issued under
Sec. 201(d) of Pub. L. 99-251, 100 Stat. 23; Sec. 831.912 also
issued under Sec. 636 of Appendix C to Pub. L. 106-554, 114 Stat.
2763A-164; Subpart P also issued under Sec. 535(d) of Title V of
Division E of Pub. L. 110-161, 121 Stat. 2042; Subpart V also issued
under 5 U.S.C. 8343a and Sec. 6001 of Pub. L. 100-203, 101 Stat.
1330-275; Sec. 831.2203 also issued under Sec. 7001(a)(4) of Pub. L.
101-508, 104 Stat. 1388-328.
Subpart A--Administration and General Provisions
0
2. Add Sec. 831.117 to subpart A to read as follows:
Sec. 831.117 Computation of the supplemental liability.
(a) OPM will compute each supplemental liability of the Fund using
demographic factors specific to the populations for which the
supplemental liability applies.
(b) The supplemental liability will be computed based on the
economic assumptions used by the Board of Actuaries of the Civil
Service Retirement System for the most recent valuation of the System.
(c) Each supplemental liability shall be rounded to the nearest one
hundred million dollars.
Subpart C--Credit for Service
0
3. Amend Sec. 831.303 by revising paragraphs (c)(3) and (d)(3) to read
as follows:
Sec. 831.303 Civilian service.
* * * * *
(c) * * *
(3) For the purpose of paragraph (b)(2) of this section, the term
``present value factor'' has the same meaning as defined in Sec.
831.603 and ``time of retirement'' has the same meaning as defined in
Sec. 831.2202.
(d) * * *
(3) For the purpose of paragraph (d)(2) of this section, the term
``present value
[[Page 49280]]
factor'' has the same meaning as defined in Sec. 831.603 and ``time of
retirement'' has the same meaning as defined in Sec. 831.2202.
Subpart F--Survivor Annuities
0
4. Amend Sec. 831.603 by revising the definition of ``present value
factor'' to read as follows:
Sec. 831.603 Definitions.
* * * * *
Present value factor means the amount of money (earning interest at
an assumed rate) required at the time of annuity commencement to fund
an annuity that starts at the rate of $1 a month and is payable in
monthly installments for the annuitant's lifetime based on mortality
rates for annuitants paid from the Civil Service Retirement and
Disability Fund; and increases each year at an assumed rate of cost of
living adjustment. Assumed rates of interest, mortality, and cost-of-
living adjustments used in computing the present value are those used
by the Board of Actuaries of the Civil Service Retirement System for
valuation of the System based on dynamic assumptions. The present value
factors are unisex factors obtained as a composite of sex-distinct
present value factors.
* * * * *
Subpart V--Alternative Forms of Annuities
0
5. Amend Sec. 831.2202 by revising the definition of ``present value
factor'' to read as follows:
Sec. 831.2202 Definitions.
* * * * *
Present value factor has the same meaning in this subpart as
defined in Sec. 831.603.
* * * * *
PART 839--CORRECTION OF RETIREMENT COVERAGE ERRORS UNDER THE
FEDERAL ERRONEOUS RETIREMENT COVERAGE CORRECTIONS ACT
0
6. The authority citation for part 839 continues to read as follows:
Authority: Title II, Pub. L. 106-265, 114 Stat. 770.
Subpart A--General Provisions
0
7. Amend Sec. 839.102 by revising the definition of ``present value
factor'' to read as follows:
Sec. 839.102 Definitions.
* * * * *
Present value factor has the same meaning in this subpart as
defined in Sec. 831.603.
* * * * *
PART 841--FEDERAL EMPLOYEES RETIREMENT SYSTEM--GENERAL
ADMINSTRATION
0
8. The authority citation for part 841 continues to read as follows:
Authority: 5 U.S.C. 8461; Sec. 841.108 also issued under 5
U.S.C. 552a; Secs. 841.110 and 841.111 also issued under 5 U.S.C.
8470(a); subpart D also issued under 5 U.S.C. 8423; Sec. 841.504
also issued under 5 U.S.C. 8422; Sec. 841.507 also issued under
section 505 of Pub. L. 99-335; subpart J also issued under 5 U.S.C.
8469; Sec. 841.506 also issued under 5 U.S.C. 7701(b)(2); Sec.
841.508 also issued under section 505 of Pub. L. 99-335; Sec.
841.604 also issued under Title II, Pub. L. 106-265, 114 Stat. 780.
Subpart D--Government Costs
0
9. Amend Sec. 841.401 by revising paragraphs (b)(3) and (4) and adding
paragraph (b)(5) to read as follows:
Sec. 841.401 Purpose and scope.
* * * * *
(b) * * *
(3) Agency appeals of rate determinations;
(4) Methodology for determining the amount due from each agency;
and
(5) Requests for reconsideration of the supplemental liability.
0
10. Amend Sec. 841.402 by revising the definition of ``actuary'' to
read as follows:
Sec. 841.402 Definitions.
* * * * *
Actuary means a professional who meets the qualification standards
to issue a statement of actuarial opinion in regard to defined benefit
retirement plans in the United States.
* * * * *
0
11. Amend Sec. 841.403 by revising the introductory text, paragraph
(b), paragraph (g), and adding paragraph (h) to read as follows:
Sec. 841.403 Categories of employees for computation of normal cost
percentages.
Separate normal cost percentages for FERS, FERS-RAE and FERS-FRAE
will be determined for each of the following groups of employees:
* * * * *
(b) Congressional employees, including members of the Capitol
Police;
* * * * *
(g) Other employees of the United States Postal Service;
(h) All other employees.
0
12. Revise Sec. 841.406(a) to read as follows:
Sec. 841.406 Determination of normal cost percentages.
(a) OPM will determine the normal cost percentages for each
category of employees. These normal cost percentages will be used by
all agencies that have not been granted a single agency rate under
Sec. 841.412.
* * * * *
0
13. Revise Sec. 841.407(b)(1) to read as follows:
Sec. 841.407 Notice of normal cost percentage determinations.
* * * * *
(b) * * *
(1) The normal cost percentages and any single agency rates for
each category of employees;
* * * * *
0
14. Revise Sec. 841.409 to read as follows:
Sec. 841.409 Agency right to appeal normal cost percentage.
(a) An agency with at least 1,000 employees in the general category
of employees or 500 employees in any of the special categories may
appeal to the Board the normal cost percentage for that category as
applied to that agency.
(b) No appeal will be considered by the Board unless the agency
files, no later than 6 months after the date of publication of the
notice of normal cost percentages under Sec. 841.407, a petition for
appeal that meets all the requirements of Sec. 841.410.
0
15. Amend Sec. 841.410 by revising the section heading and revising
the introductory text of paragraph (c) and revising paragraph (c)(3) to
read as follows:
Sec. 841.410 Contents of petition for appeal of normal cost
percentage.
* * * * *
(c) The actuarial report must contain a detailed actuarial analysis
of the normal cost of FERS benefits as applied to the employees of that
agency in the category of employees for which the agency is appealing.
The actuarial report must--
* * * * *
(3) Specifically address and consider each of the demographic
factors listed in Sec. 841.404. The appealing agency is responsible
for developing data relating to the first nine demographic factors as
they relate to the category of agency employees for which the appeal is
being filed. OPM's demographic factors (available from OPM) will be
presumed to be sufficient and reliable for factors 10 through 13 unless
the appealing
[[Page 49281]]
agency is able to demonstrate, through sufficient and reliable data
relating to its employees or former employees, the use of alternative
factors is appropriate. The fourteenth factor, administrative expenses,
will be supplied by OPM.
* * * * *
0
16. Amend Sec. 841.411 by revising the section heading and revising
paragraph (a), (b), and (d)(3) and (4) to read as follows:
Sec. 841.411 Appeals procedure for normal cost percentage.
(a) The normal cost percentages as published under Sec. 841.407
are presumed to apply to all agencies. Any agency appealing application
of a published normal cost percentage to any category of employees in
its workforce must demonstrate to the satisfaction of the Board that
the normal cost percentage for that category of employees in that
agency is sufficiently different from the published normal cost
percentage.
(b) While an agency has an appeal pending, the published normal
cost percentage continues to apply to that agency.
* * * * *
(d) * * *
(3) When all relevant factors are considered together, there is a
demonstrated difference between the published normal cost percentage
being appealed and the normal cost percentage for the group at issue;
and
(4) The difference is at least 10 percent of the published normal
cost percentage being appealed.
0
17. Revise Sec. 841.412(c) to read as follows:
Sec. 841.412 Rates determined by appeal.
* * * * *
(c) A single agency rate may be higher or lower than the published
normal cost percentage and will remain in force for not less than 3
years.
* * * * *
0
18. Add Sec. 841.414 to subpart D to read as follows:
Sec. 841.414 Computation of the supplemental liability.
(a) OPM will compute each supplemental liability of the Civil
Service Retirement and Disability Fund using demographic factors
consistent with those used for the computation of the normal cost
percentages under Sec. 841.403.
(b) The supplemental liability will be computed based on the
economic assumptions determined by the Board for the most recent
valuation of the Federal Employees Retirement System.
(c) Each supplemental liability will be rounded to the nearest one
hundred million dollars.
0
19. Add Sec. 841.415 to subpart D to read as follows:
Sec. 841.415 Right to request reconsideration of the supplemental
liability.
(a) The Secretary of the Treasury or the Postmaster General may
request the Board to reconsider a determination of the amount payable
with respect to any supplemental liability.
(b) No request for reconsideration will be considered by the Board
unless the Secretary of the Treasury or the Postmaster General files,
no later than 6 months after the date of receipt of the first notice of
the amount payable with respect to the supplemental liability, a
request for reconsideration that meets all the requirements of Sec.
841.416.
0
20. Add Sec. 841.416 to subpart D to read as follows:
Sec. 841.416 Contents of a request for reconsideration of the
supplemental liability.
(a) To request reconsideration of the amount payable with respect
to the supplemental liability, the Secretary of the Treasury or the
Postmaster General must file with OPM--
(1) A signed letter of appeal summarizing the basis of the request;
and
(2) An actuarial report that contains a detailed actuarial analysis
of the request.
(b) The actuarial report must--
(1) Be signed by an actuary;
(2) Specifically present any data and development of assumptions
related to the request for reconsideration;
(3) Use each of the demographic factors listed in Sec. 841.404;
and
(4) Use the economic assumptions under Sec. 841.414(b). When a
request is based in whole or in part on a pattern of merit salary
increases, the report may include an analysis of the economic
assumptions concerning salary and wage growth to take into account the
combined effect of merit and general wage and salary growth.
0
21. Add Sec. 841.417 to subpart D to read as follows:
Sec. 841.417 Reconsideration of the supplemental liability.
(a) The Board cannot sustain a request for reconsideration unless
the Board finds that--
(1) The data used in the actuarial report required by Sec. 841.416
are sufficient and reliable;
(2) The assumptions used in the actuarial report required by Sec.
841.416 are justified; and
(3) The difference in the supplemental liability amount is at least
2 percent of the present value of future benefits calculated in OPM's
computation of the supplemental liability.
(b) If the Board sustains a request for reconsideration of the
supplemental liability, OPM will recompute the supplemental liability
according to the economic and demographic assumptions recommended by
the Board.
PART 842--FEDERAL EMPLOYEES RETIREMENT SYSTEM--BASIC ANNUITY
0
22. The authority citation for part 842 continues to read as follows:
Authority: 5 U.S.C. 8461(g); Secs. 842.104 and 842.106 also
issued under 5 U.S.C. 8461(n); Sec. 842.104 also issued under Secs.
3 and 7(c) of Pub. L. 105-274, 112 Stat. 2419; Sec. 842.105 also
issued under 5 U.S.C. 8402(c)(1) and 7701(b)(2); Sec. 842.106 also
issued under Sec. 102(e) of Pub. L. 104-8, 109 Stat. 102, as amended
by Sec. 153 of Pub. L. 104-134, 110 Stat. 1321-102; Sec. 842.107
also issued under Secs. 11202(f), 11232(e), and 11246(b) of Pub. L.
105-33, 111 Stat. 251, and Sec. 7(b) of Pub. L. 105-274, 112 Stat.
2419; Sec. 842.108 also issued under Sec. 7(e) of Pub. L. 105-274,
112 Stat. 2419; Sec. 842.109 also issued under Sec. 1622(b) of
Public Law 104-106, 110 Stat. 515; Sec. 842.208 also issued under
Sec. 535(d) of Title V of Division E of Pub. L. 110-161, 121 Stat.
2042; Sec. 842.213 also issued under 5 U.S.C. 8414(b)(1)(B) and Sec.
1313(b)(5) of Pub. L. 107-296, 116 Stat. 2135; Secs. 842.304 and
842.305 also issued under Sec. 321(f) of Pub. L. 107-228, 116 Stat.
1383, Secs. 842.604 and 842.611 also issued under 5 U.S.C. 8417;
Sec. 842.607 also issued under 5 U.S.C. 8416 and 8417; Sec. 842.614
also issued under 5 U.S.C. 8419; Sec. 842.615 also issued under 5
U.S.C. 8418; Sec. 842.703 also issued under Sec. 7001(a)(4) of Pub.
L. 101-508, 104 Stat. 1388; Sec. 842.707 also issued under Sec. 6001
of Pub. L. 100-203, 101 Stat. 1300; Sec. 842.708 also issued under
Sec. 4005 of Pub. L. 101-239, 103 Stat. 2106 and Sec. 7001 of Pub.
L. 101-508, 104 Stat. 1388; Subpart H also issued under 5 U.S.C.
1104; Sec. 842.810 also issued under Sec. 636 of Appendix C to Pub.
L. 106-554 at 114 Stat. 2763A-164; Sec. 842.811 also issued under
Sec. 226(c)(2) of Public Law 108-176, 117 Stat. 2529; Subpart J also
issued under Sec. 535(d) of Title V of Division E of Pub. L. 110-
161, 121 Stat. 2042.
Subpart F--Survivor Elections
0
23. Amend Sec. 842.602 by revising the definition of ``present value
factor'' to read as follows:
Sec. 842.602 Definitions.
* * * * *
Present value factor means the amount of money (earning interest at
an assumed rate) required at the time of annuity commencement to fund
an
[[Page 49282]]
annuity that starts at the rate of $1 a month and is payable in monthly
installments for the annuitant's lifetime based on mortality rates for
annuitants paid from the Civil Service Retirement and Disability Fund;
and increases each year at an assumed rate of cost-of-living
adjustment. Assumed rates of interest, mortality, and cost-of-living
adjustments used in computing the present value are those used by the
Board of Actuaries of the Civil Service Retirement System for valuation
of the Federal Employees' Retirement System based on dynamic
assumptions. The present value factors are unisex factors obtained as a
composite of sex-distinct present value factors. Separate present value
factors apply for FERS annuities that receive cost-of-living
adjustments before the retiree attains age 62, versus FERS annuities
that do not receive cost-of-living adjustments before the retiree
attains age 62.
* * * * *
0
24. Add Sec. 842.616 to subpart F to read as follows:
Sec. 842.616 Publication of present value factors.
When OPM publishes in the Federal Register notice of normal cost
percentages under Sec. 841.407, it will also publish updated present
value factors.
Subpart G--Alternative Forms of Annuities
0
25. Amend Sec. 842.702 by revising the definition of ``present value
factor'' to read as follows:
Sec. 842.702 Definitions.
* * * * *
Present value factor has the same meaning in this subpart as
defined in Sec. 842.602.
* * * * *
PART 847--ELECTIONS OF RETIREMENT COVERAGE BY CURRENT AND FORMER
EMPLOYEES OF NONAPPROPRIATED FUND INSTRUMENTALITIES
0
26. The authority citation for part 847 continues to read as follows:
Authority: 5 U.S.C. 8332(b)(17) and 8411(b)(6) and sections
1131 and 1132 of Pub. L. 107-107, December 28, 2001, 115 Stat 1242;
5 U.S.C. 8347(a) and 8461(g) and section 1043(b) of Pub. L. 104-106,
Div. A, Title X, Feb. 10, 1996, 110 Stat. 434. Subpart B also issued
under 5 U.S.C. 8347(q) and 8461(n).
Subpart A--General Provisions
0
27. Amend Sec. 847.103(b) to revise the definition of ``actuarial
present value'' and to add the definition of ``present value factor''
in alphabetical order as follows:
Sec. 847.103 Definitions.
* * * * *
(b) * * *
Actuarial present value means the amount of monthly annuity at time
of retirement multiplied by the applicable present value factor.
* * *
Present value factor has the same meaning in this part as defined
in Sec. 842.602.
* * * * *
Subpart F--Additional Employee Costs Under the Retroactive
Provisions
Sec. 847.602 [Removed and Reserved]
0
28. Remove and reserve Sec. 847.602.
[FR Doc. 2017-23141 Filed 10-24-17; 8:45 am]
BILLING CODE 6325-38-P
